QuickBooks Vendor Setup Can Be TOO Easy! Don’t Hold Off on Collecting W-9s

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In my 20+ years as a practitioner, I have used many accounting and resource enterprise systems (ERPs).  From DOS based (yes, I was there) to cloud based, from industry customized to mainstream, from SAP to PeopleSoft to NetSuite to Great Plains.  Vendor setups required segregation of duties in the security roles and there were business processes that included requiring the W-9 not only for populating the vendor record, but also for validation and compliance. 

Setting up a Vendor Can Be Too Easy

Nothing prepared me for the vendor setup in Intuit QuickBooks.  As I left the corporate world and settled into my consultancy, I chose, according to the Intuit home page accounting software that was “Shockingly easy to use”.   And it was. 

  •  Importing in your bank transactions?  Easy.  Create a Vendor on the fly. 

  • Entering checks directly on the check register?  Easy.  Create a vendor on the fly

No W-9. No Tax ID. No Address.  Let’s just hope their legal name was spelled right. 

Now to be fair, you technically don’t have to collect a W-9 for vendor setup in any accounting system or ERP, however, this was the first time that I could setup a vendor without requiring a tax id, or at least an address, both of which are found on a W-9.  Collecting the W-9 would have not only given me that information, but it would have also allowed me to determine whether that vendor was reportable and 1099 eligible before the stress of tax season. 

What Comes Next – Stressful Tax Season

Setting the potential for fraud (is it a real vendor?) or setting up duplicate vendors (based on tax id), It’s the end of the year and now all those vendors need to be reviewed to determine, if they are reportable and in order to do that, now you must collect the W-9.  Letters are sent to all vendors that had payments through the year at or over $600.  Then the wait for the vendors who have already been paid, complete and submit back to you a document that guarantees their hard earned income will be reported to the IRS.  And that process must happen, because if, like many companies that use QuickBooks and similar software, the accounting activity is sent to their CPAs to process, and guess what?  Many CPA firms are requiring vendor W-9s from their clients. 

Best Practice:  Collect W-9’s and More

 Build in vendor setup and maintenance processes that will grow with your company, protecting the vendor master file from not only incurring fees and penalties from the IRS for non-compliance and legal name / tax ID mismatches, but also from duplicate payments caused by setting up the same vendor multiple times, and fraud resulting from not validating your vendors prior to paying them: 

  •  IRS W-9 – Do an IRS TIN Match to Verify Legal Name and Tax ID match with IRS records.  Search the vendor legal name against OFAC to ensure that the vendor is not on any of the US Watchlists.

  • Banking Form – Paying electronically? Require the vendor to submit their banking details on vendor letterhead or on a branded banking form from your company.  Validate the routing number can be used for ACH (or Wire).    

 Want more information on best practices to setup a vendor?  See my blog post US Entity: Validations Required to Setup a US Vendor

 Yes – it will take longer to setup the vendor.  Click here to read my blog post on why and how to handle internal stakeholders (your boss, other team members). 

 Resource to Help! W9 Manager

Ever thought of automating your W-9 collection process?  Listen to the podcast where guest John Croyle, Founder, W9 Manager talks about how he solved what can be a year-end headache and get information on the IRS 1099-NEC. Stay tuned until the end for a listener only bonus!

 Other Resources

  • Haven’t performed a vendor inactivation or Vendor Master File clean lately? See my  5 Day Vendor Master File Clean-Up.

  • Want a handy Cheat Sheet that includes the links to vendor validation resources?  Sign up for my mailing list to download the Vendor Validation Reference List and share with your entire team! 

Protect the Vendor Master File from Fraud.  Keep it Clean. 

Debra R Richardson


Debra is an accounts payable speaker, consultant, and trainer with over 20 years of experience in AP, AR, general ledger, and financial reporting for Fortune 500 companies including Verizon, General Motors and Aramark.

For the past eight years, Debra has focused on Global Vendor Maintenance, and implemented a vendor self-registration portal for 140k+ global vendors across five Accounting Systems/ERPs. In her consultancy, she focuses on internal controls and authentication to prevent fraud in the vendor master file.