1099’s are due to your Contract Labor vendors by February 2nd this year. Even if you did not set up your 1099 tracking correctly in QuickBooks, you can capture the information by setting it up now.
Keep in mind that you should enter and reconcile all of your checking accounts to assure that you have all checks entered through year end. As with W-2’s, the data you provide to your 1099 vendors will have personal income tax consequences for them, and it’s important the information you report to them and to the government is accurate.
The first step in 1099 processing is to be sure you know who to send 1099’s to and have the system set up correctly in QuickBooks. The general rules are that for every unincorporated vendor you contract for labor or labor and material services combined, you must have them complete a form W-9, which provides you with their Tax ID#*. In order to generate a 1099 report for this vendor at the end of the year, you must set up the vendor properly in QuickBooks. You need to make sure the 1099 option is turned on in your Preferences to be able to enter your Vendors Federal Tax ID# or SS #.
For instance, if you happen to reimburse your vendors for materials or mileage, these payments may not be included on the 1099. In this space, I usually select the “multiple accounts” option and choose any accounts that I may pay a 1099 vendor that may qualify as non-employee compensation. You must consider how your items are set up as well and be sure accounts that are linked to items that may include employee compensation are included here. For instance, you may choose your Cost of Goods Sold Account called “subcontractor services”, but you may sometimes pay your subcontractors with an item linked to a generic Cost of Goods Sold Account, in this case you may need to include this account as well. Keep in mind, though, that material purchases only are generally not included in 1099, only labor or labor and materials contracted in combination*.
After saving these preferences, you should be ready for 1099 processing.
If you are having difficulty capturing the information, or are unsure of the proper set up, contact our company as a QuickBooks expert or your Tax Professional for advice.