How do you handle sub insurance and W9?
You need W9s from every sub you pay and proof of insurance before they step foot on a job. This protects you legally and keeps your books clean. Here's what actually needs to happen and when.
Collect the W9 before the first payment
A W9 is required by the IRS for any sub you'll pay over $600 in a calendar year. Get it signed before work starts, not after. If you pay without a W9 on file, you still have to report the payment on a 1099-NEC at year-end, but you're exposed if an audit happens. Store the W9 with your contract. Don't rely on email chains or verbal agreements. The W9 confirms the sub's legal name, EIN or SSN, and business structure. If a sub refuses to provide one, don't hire them. It's a red flag. Some subs will claim they're always cash jobs. That doesn't matter. You still need documentation.
Get insurance and verify it's active
Before any sub touches your jobsite, confirm they carry general liability insurance. Minimum coverage is usually 1 million, but your own insurance policy may require more. Ask for a certificate of insurance (COI), not just a quote or policy number. The COI shows the policy is active and lists your company as an additional insured, which protects you if something goes wrong on their job. Call the insurance company directly if you're skeptical. Don't just look at the issue date. Check the expiration date. A COI that expired last month is worthless. Store these on file. If you're managing crews in-house, those people are employees, not subs, so no W9 or insurance certificate required—just payroll setup.
Track which subs hit the 600 threshold
At year-end, you'll issue a 1099-NEC to any sub paid over 600 dollars. Keep a running total per sub so you know when to file. This isn't complicated, but it's required. Most accounting software handles this automatically if you've categorized payments correctly. If you miss a 1099, the IRS will notice when they cross-reference what the sub reports on their own return. Penalties for missing 1099s run about 50 dollars per form, but they add up fast if you've got a dozen subs. Setting reminders in January and October to review your sub list keeps you on track.
When to require additional documentation
If a sub brings crew members to your job, those crew members need to be their employees or subs (with their own W9s), not yours. If you're paying them directly or directing their work, you're potentially creating an employee relationship, which opens you to misclassification claims. Some states are aggressive about this. Get a written agreement that spells out the sub relationship. If a sub will be on-site regularly or for extended periods, request a business license copy. Some jurisdictions require it. Don't overthink this, but document what you know. If a sub buys materials and bills you for them, separate that from labor payment so you're clear on what 1099 amount you're reporting.
Bottom line
Collect W9s and insurance certificates before the first job. Track payments to know who hits the 1099 threshold. File 1099-NECs by January 31. Keep everything organized in one place—either a folder in your records or a simple spreadsheet. This takes an hour to set up and saves you headaches at year-end.