QuickBooks Online 2024: Setup 1099 Contractors

in this video we're going to talk about how to track your 1099 contractors in QuickBooks online or the subcontractors the individuals that you pay for work or labor in which you're legally obligated to give them a 1099 anyc form at the end of the year as a US business is required to so in QuickBooks online if you click on the payroll uh button on the left hand side and then click on contractors you're going to see the list of all the vendor ERS that are marked as contractors in QuickBooks so right now there's only one Michael kretchmar but there could be more that I have failed to tell QuickBooks this is actually a contractor and I'm going to show you an example of what happens if I don't set it up correctly so let's say for example I I take it for what it is and then at the end of the year I'm going to prepare the 1099s for the contractors I'm going to click on prepare 1099 and then click on confirm info and go then I'm going to click on next and then only one contractor shows up on the list um that's because that's the only one that set up to be a contractor but it's possible that I have other other people other individuals other subcontractors I paid for services for labor that I'm also supposed to report but because we haven't marked it as a as a contract labor or as a contractor is not showing up in the 1099 system so I'm going to EXC out of that and show you there's a couple ways you can discover that easiest way is to do a run a report called expenses by vendor summary and then you run it for let's say last year and I've simplified this by only having a couple of transactions and then by looking at all the expenses that you paid to all the vendors and uh that's why it's really important to always put a vendor in a transaction you get to see which are all the individuals so we got Carlos Gomez Michael kretchmar all the individuals that you've paid that um that year and as long as you PID pay them more than 600 they are a$ 1099 contractor now I'm going to show you really quick I'm just going to do this year so you can see how this report is usually not that simple this report has every single vendor you have paid for every reason so you might need to print these out and look at each one and see okay where are my individuals that are my contractors or my independent contractors and pick them out from there but I'm going to do last year again and click on run report and essentially uh basically I know that Michael crar is one of my contractors but Carlos Gomez is probably another one of my contractors so the way I fix it is I'm going to go into expenses and click on vendors and then I going to find Carlos I want to find his profile here select it and I'm going to click on edit and then in here I'm going to look all the way in the bottom to where it says track payments for $10.99 as long as I have that little check boox there now QuickBooks puts it in the contractor's category even though it's still a vendor but it puts it in the contractor's category so you can use it to do your 1099 forms at the end of the year so you're going to put the person's social security number or a tax ID okay depending on what they have uh typically individuals that don't have businesses it would be a social security number if it's a business it would you would put a tax ID but then most businesses you shouldn't 1099 you should mostly 1099 individuals that gets tricky you might need to work with an accountant on that but generally it's indiv indviduals that you pay for services and you also need to put uh their address because otherwise you can't mail them the $199 I'll kind of show you I'll leave the address blank and I click on Save okay so I've done that I'm going to go to contractors now and now great now QuickBooks has both of my contractors that I'm supposed to give a 10 1099 to and they both show up on the screen here so it looks like we're on the right track so then I'm going to click on prepare 1099 and then click on confirm info and start filing in this page by by the way this is a really important one too you're going to click on select accounts and you're going to pick from your chart of accounts which categories or which accounts uh should be tied to this contractor 1099 concept because sometimes you can pay a contractor for services and sometimes maybe you're reimbursing them for gas or reimbursing them for going to Home Depot and buying supplies for a job those payments typically are excluded from the $10.99 so the way you uh sort of make sure that you only report their labor their services provided is you're going to pick the specific account that matches that so I'm going to show you that I'm going to ex out of that I'm going to remove both of these I'm going to click select accounts one more time I'm going to type the word labor and then we have an account here called Labor so I'll select that and then I'm going to search for subcontractor okay that's not there maybe just contractor and that's there contractor so you have to look for all the accounts that look and smell like Professional Services like labor okay and you have to select them and then click on ADD and then you have to tell it okay this goes in box one of the 1099 NEC long story short this is the most common thing that we're going to report box one on the 1099 NEC uh now if you're paying somebody rent an individual paying rent then you will report that under the rents box one and then notice that there's other boxes here other reportable transactions but for the most part 99% of the times it's going to be box one or rents so in this case let's say we're not doing rents this is just labor so we're going to use box one non-employee compensation then click on next now on the next screen it shows me uh both of my contractors and the total dollar amounts that I paid them through the year so this is last year and notice that I can't check cut Gomez CU I don't have the full information I don't have the address in there obviously that's the problem so I'm going to click on edit here which is pretty cool I can edit the address on the fly so let's do 101 Main Street Miami Florida 33333 click on Save uh and then I have to make sure that I spell out the actual legal name so Carlos and uh Gomez and then click on save so should be enough so now that I have full legal names addresses and Social Security numbers or uh Ein or business tax IDs then I should be able to then file the 1099 so I'm going to click on next um and then um you get a quick preview of what that looks like I can click on preview and see the actual form which is pretty neat so you get a really clear idea uh on what this is going to look like even though um this is all going to be electronically filed you basically get to see a preview of the printed version of this you don't have to paper file with QuickBooks everything's electronic file which is pretty cool then you click on next and then you're going to pay for that okay so um depending on the type of service that you have you're typically going to just pay for the $199 click on uh continue to e file and then that's going to charge you know the credit card that you have on file it's going to ask you to to to validate all this information okay then click on verify address and save and then you would uh finish the purchase process and then file so obviously I'm not going to do that cuz it's all got uh fake information in there so but that that would be the last thing you would do you would pay for the electronic filing of the 1099s you would file it um and then you you get you'll have PDF versions of that and you can either email it to the contractor or have it physically mailed to the contractor so that's it in a nutshell that's how you create uh your vendors that are contractors and essentially that's how you flow through all the way to 1099s at the end of the year make sure you check the description for all the videos in this series of QuickBooks Online tutorials and subscribe to the channel so you can get notifications every time I create tutorials like this I hope this was useful I hope this enhances your QuickBooks Online experience and I'll see you on the next one

Channel: Hector Garcia CPA

Views: 6,227

Keywords: quickbooks, tutorial, desktop, online, pro, premier, enterprise, accountant, bookkeeping, accounting, quickbooks online, quickbooks tips and tricks, qbo, quickbooksonline, quickbooks desktop, qbo tutorial, quick books, quickbook

Id: b4R_Jf20tvY

Length: 8min 22sec (502 seconds)

Published: Fri Jan 19 2024