Nichole, I would wait until after a good hard frost before digging, to give the plant as long as possible to work on growing tubers. They will be very small the first year, and some 'spaghetti roots' are to be expected (and probably will not overwinter well).

Here is what one dahlia hybridizer had to say about digging first-year seedlings:

teddahlia wrote:First year tubers are smaller. My first
goal is to get at least two portions with eyes and that is by a single
division of the small clump not going for any individual tubers. It the
clump is bigger, I can get three divisions and bigger yet, four. A
home run would be two small tubers and a division of the rest of the
clump into 2, 3 or 4 sections. If a first year seedling has a clump
that looks like varieties that you grow from tubers, you know it is an
excellent tuber maker. But that first year dividing that large clump is
not easy as the tubers are bunched together much like clumps grown from
cuttings.

Thank you for your comments! One thing confused me though - you said to let them stay outside until a good hard frost? I thought that Dahlias should be dug BEFORE a good hard frost because they're so tender?

Some folks (especially large dahlia sellers in temperate climates) DO dig before frost, but that is in order to be done with the fall cleanup before Thanksgiving. If you have less then a hundred plants, the digging/dividing/storage isn't too time consuming, and you may be able to wait longer for the first hard frost, allowing the first year tubers to get as large as possible. This will increase the odds that they will survive the storage.

The soil-covered tubers will not be damaged by hard frost, but the tops will turn to black mush. Until then, all the roots will continue growing. Once the top plant is destroyed (by cutting down or by frost), the tubers will start to develop NEW eyes (from which new plants sprout from). Those eyes make it easier to divide the clump, as each tuber NEEDS at least one viable eye to make a plant in spring from. When clumps get to be 1-2 feet across, fall dividing is pretty important for storage convenience... not to mention easier on your back. I suggest you NOT divide seedlings in their first year, unless you are experienced in this skill.

Be warned- every grower will advise you differently about dahlia digging/storage, and it is up to you to find your own path. We all live in different areas of the world, with different climates, soils and humidity. What works for one will NOT necessarily work for another. Read/ask a lot, and choose what makes sense for your part of the world and your particular situation. Be flexible, and change next year what didn't work this year.

The best way, in my experience, is to store dahlias in pots of soil they were grown in. Cut off the tops, stick a label in the soil so you know name/color/size, and store (with no watering) in a cool dark place between 40-55 degrees. In the spring, water gently, and move to a place where there is light. Once started, you can pop the plant out of the pot, directly into the ground. Or you could divide it, taking care to keep a sprout with each tuber mini-clump... voila, more plants!

Of course, the 'best' way is often not the most convenient. Just fine if you have a few dahlias, but problematic if you grow more then ten plants. I grow close to a thousand plants each year... could you imagine my small crawl space with all those huge pots? lol Dividing the clumps cuts down the needed storage space dramatically.