QuickBooks offers you an option to set up contractors as a vendor. With a successful setup of contractors, QB keeps track of all the payments made to contractors by you. It will also help you in keeping the information accurate and ready when you need to file their 1099s. So, most of the user’s concern is how to set up contractors and track them for 1099s in QuickBooks. Don’t worry! You’re on the right page as this article gives you complete guidelines on adding and setting up contractors. Moreover, you will also come to know how to keep track of the payments that you pay to them or track the contractors for 1099s in QuickBooks.
Let’s know who Actually Needs to File 1099:
Non-employees who paid $600 or more in a year must file a 1099 (excluding payments made by credit card or other electronic payment methods). It is also recommended that you review the IRS standards to learn everything you need to know about filling out 1099 forms.
Important Note: Only contractors who have the US addresses are allowed to 1099 E-File services.
Set up Contractors in QuickBooks Desktop Windows:
To begin tracking contractors’ 1099 payments, it is required that you enable the 1099-MISC form. To do the same, follow the below steps:
Step 1: Turn on the 1099-MISC feature:
- First, go to the Menu bar which is at the top
- Next, select the Edit menu >>> Preferences
- Now, go to the Company Preferences tab in the Tax:1099 option
- After that, move to the section “Do you file 1099 forms?” and then choose “Yes” option
- After making the required changes, you have to click on the “Ok” tab in the last step.
Related article: How to Setup 1099 Employees in QuickBooks
Step 2: Add a contractor as a Vendor:
- At the top of your home page, select the Menu bar
- Select the Vendors >>>> Vendor Centre
- Move to each tab and then fill out each and every field
- The information that you required here, you can have it from W-2 form
- If any field has incorrect information then don’t worry you can correct them later
- Finally, hit the Ok tab.
Step 3: Track your payments for 1099s:
With the help of below steps, you set up vendors and start tracking their payments for 1099s:
- Move to the menu bar which is located at the top of your home screen
- Select the Vendors >>>> Vendor Centre
- Look for the vendor which you want to track
- Next, go to the Edit menu which you find in front of their name
- To verify the discussed information, Go to address into tab.
- Check whether the state abbreviation and ZIP Code is accurate or not
- If your vendor is a person rather than a company then make sure that the vendor’s legal name should appear on the first name, middle name, and last name fields
- But if you have a company as a vendor rather than a person then you need to leave the company as a vendor rather than a person then you need to leave the company’s Name field empty
- If you entered the company’s name in the field then it appear twice when you prepare the 1099 MISC form
- After that, go to the “Tax Settings” tab
- And then check whether the vendor is eligible for 1099 or not
- Enter the required vendor’s tax in the relevant Vendor Tax ID field
- You also need to enter the Tax Identification Number (TIN) of the vendor.
With this if the option is selected then QuickBooks will automatically start keeping track of the vendor payments. So, whenever, you will be required to file 1099s then you can easily add the payment of the vendor to the form.
Expectedly, you’ve learned the complete process to set up contractors and track them for 1099s in QuickBooks. But it is also a suggestion that you should consult with your accountant before you plan to set up contractors by yourself in QuickBooks. The rest you can execute the above steps to successfully set up a contractor as a vendor and start keeping track of the payments which are made to them so that you won’t face any issue while filing 1099s form.
Frequently Asked Questions
Ans: QuickBooks has reports to help you get ready to create your 1099s. To see who needs to file a 1099 for, you need to run the report. QuickBooks Desktop mainly has two reports to help you review your 1099 information.
1099 Summary: Shows the 1099 box totals and allows yo to filter by 1099 vendors, accounts or thresholds.
1099 Detail: Shows the details of each check paid to vendors with additional filters for 1099 vendors and accounts.
To review the report, you can follow the below steps:
● Go to the Reports and then select “Vendors & Payables”
● Choose the option either 1099 Summary or 1099 Detail.
● The reports show you which contractors qualify for 1099s.
Ans: You can make modifications to a form that has a future Scheduled Date rather than establishing a corrected form if you need to make a correction. Corrections that can be made after forms have been submitted but not yet e-filed with the IRS (future scheduled date). You can make the following correction in the 1099 forms after it has been submitted: Amount, Payer TIN, Payer Name, Payer Address, Receipt TIN, Recipient Name, Recipient Address, Payer Type, and Recipient Type.
Note: You can’t edit the state information and from type like form 1099 Misc. to a 1099 INT.
Ans: First, go to the View Pay Stubs Online option and select it. Next, enter the contractor email address and then hit “Save”. You can also send a temporary User ID and password and then hit the option “Send Email”. At last, click “Done”.