on QuickBooks ‘s web site
A step-by-step guide
Because Intuit is continually improving its exploiter experience, what you see on your screen in QuickBooks Online might look slightly unlike from the screenshots that follow. 1. Set up QuickBooks Online for 1099s. hover over the Expenses tab in the left menu, then click on Vendors. Once the Vendor screen appears, suction stop on Prepare 1099s . 2. Enter your company data. Make any necessary changes by clicking on the pencil icon to the right of your company ’ second mention and savoir-faire or tax ID number. once you have entered your ship’s company information or verified it is correct, click the future button . 3. Select the character of payments you make. Choose all the options that apply here. Most businesses will choose “ rents ” and “ nonemployee compensation. ” Once you have checked the boxes next to the requital types, a second drop-down box will appear where you can select the accounts ( categories ) where you post the payments in QuickBooks Online. Select all accounts that apply, then click Next to continue. ( bill that as of this article ‘s write, the QuickBooks Online user have had not been updated for the new 1099-NEC shape. ) 4. Review your contractor information. The following screen door will show you a list of vendors QuickBooks Online has identified as needing 1099s. QuickBooks Online pulls this information based on what you have previously entered in the Vendor screen for each payee. Let ’ s front at the example seller, Books by Bessie. When we click the Edit push button for this seller, we see the “ cut payments for 1099 ” box international relations and security network ’ metric ton checked . When we go back to our Prepare 1099s serve, we besides notice Books by Bessie international relations and security network ’ deoxythymidine monophosphate listed as a contractor who needs a 1099. however, we have a W-9 that indicates Books by Bessie is a lone proprietorship and consequently is discipline to receiving a 1099. fortunately, it ’ south easy to add vendors to the contractors list on the vanish. Click on the “ Add from Vendor List ” clitoris and select any vendors who should be given a 1099. Make indisputable to save when you are done . Books by Bessie now appears on the contractors list. now, you ’ ll poster there is an error because we don ’ t have a tax ID number on file for Bessie. Click the Edit link to enter the necessity information . When you click Edit, you ’ ll notice you are asked to choose a contractor type. If the W-9 your seller gave you includes a social security number, choice Individual. If it includes an EIN rather, choice business . In this shell, we ’ re going to select “ business ” because Bessie gave us a W-9 with an EIN. QuickBooks Online will by default embark the business ’ randomness mention as the seller appoint you have on file. however, Bessie ’ s W-9 besides indicates she is a sole owner, which means that a far as the IRS is concerned, her commercial enterprise ’ randomness name is her legal name. This means we will need to change the business name to Bessie ’ second legal identify ( Bessie Williams ) in order for her 1099 to be correct . once all the required information ( denoted by an star ) has been entered, click Save . then click Next to proceed to the next step in the process . 5. Review your information. This following gradation is critically crucial because it will help you detect potential errors that could result in you not filing the command 1099s. You ’ ll notice there are no payments listed on this screen. however, you know you paid Bessie $ 500 per calendar month each month stopping point class. This means she exceeded the $ 600 threshold and she should receive a 1099 . QuickBooks Online automatically applies a filter so this screen alone shows 1099 contractors that meet the $ 600 threshold for the previous class. Click the percolate picture to display other options.
Read more: How Much Does a Roof Replacement Cost?
You ’ ll notice you can change the tax class ( if you need to print 1099s for a former year ) a good as the character of contractors. We recommend filtering this list on all three “ type of contractors ” options. This will allow you to check for any contractors who were not marked to receive 1099s and any payments that should be included on the 1099 but aren ’ metric ton. In this sheath, Bessie ’ mho payments didn ’ thymine appear on this tilt because we didn ’ deoxythymidine monophosphate include the class where her payments were posted in Step 3. It would have been easy to miss issuing her 1099 if we didn ’ triiodothyronine run the 1099 reports on all filters. 6. File your 1099s. Once you are satisfied all your information is correct, it ’ second clock to proceed to the last measure in the process. Although it can be a sting costly, we recommend the Automated E-File and Delivery option. With this option, Intuit handles all 1099 filing and delivery. Keep in take care, this doesn ’ t absolve you from making sure your data is correct, but it does save you from the fuss of print, mail and filing the 1099s yourself.
Further streamline the 1099 process
You credibly noticed we were doing a lot of editing on the fly as we were walking you through the work for how to print 1099s in QuickBooks Online. There are several things you can do to prevent this and make your 1099 process even easier. 1. Always get a W-9 before you pay your seller. Each of your vendors will need to provide you with Form W-9, which lists their business ’ sulfur name, address and EIN. On this document, they besides indicate whether their business is a lone proprietorship, corporation or some early entity. tied though vendors are required to provide a W-9 when asked, many hesitate to do so after they have been paid. For this cause, we recommend never paying a seller until you have their correctly completed W-9 on file. 2. Enter the seller ’ s data equally soon as you get it. arsenic soon as you get form W-9 from your seller, enter the data into their seller profile in QuickBooks Online. This will save you from having to hunt down their information in January when the 1099 file deadline is looming. 3. Enter the seller ’ s information by rights. many vendors who operate under a DBA ( doing business as ) diagnose improperly accomplished their W-9s. A sole owner ’ randomness business name is always the individual ’ randomness legal appoint, even if they operate under a different business name. In our exercise here, Bessie Williams operates her business under the appoint Books by Bessie. Her W-9 should show her legal name — Bessie Williams — on Line 1 and Books by Bessie on Line 2. This means Bessie ’ s seller data in QuickBooks Online should show her legal name as the ship’s company name and her commercial enterprise ’ south name should be the display diagnose . If you issue a 1099 under a business name when the taxpayer is actually an individual, you could get a notice from the IRS of a name/TIN ( taxpayer designation number ) mismatch. Mismatches can result in penalties or a notice from the IRS subjugate payments to the seller to backup withholding requirements. 4. Check for missing information quarterly. There ’ s no worse time than January to try to chase down missing information so you can file your 1099s. Do a quarterly recapitulation of your seller records to ensure all the necessary information — legal name, savoir-faire and EIN — is on file. This will save you clock and frustration when the 1099 deadline is at hand.
Understanding the basics of 1099s
form 1099 is what is known as an information return. Although you must issue 1099s to vendors meeting sealed criteria, the primary purpose of 1099s is to report payments you have made to the Internal Revenue Service ( IRS ). For this argue, 1099s are sometimes dearly denote to as “ tattletale ” documents. Unlike the W-2s you issue to your employees, your vendors don ’ metric ton “ need ” 1099s in order to file their tax returns. 1099s aren ’ t included with a taxpayer ’ s federal tax hark back like W-2s are, and your vendors should be relying on their own account software to report their taxable income and deductions. When you issue 1099s to your vendors, you are basically merely letting them know that you reported the payments you made to them to the IRS. You will entirely issue 1099s to vendors you have actually paid, as these are cash-basis documents. Keep in judgment, 1099s don ’ deoxythymidine monophosphate include accounts account payable or amounts hush owed to the seller. If you receive a 1099 from a customer, you should compare the amount reported on the 1099 to your own report records. If there is a discrepancy, contact your customer so they can issue an amended 1099. This will prevent you from possibly being taxed for money you didn ’ metric ton gain.
Why you issue 1099s
By law, you are required to issue 1099s when required. There ’ mho even a doubt on your business ’ s federal tax retort that asks if you filed the needed 1099s. Answering this wonder dishonestly — or intentionally providing any incorrect information on a tax refund — constitutes perjury. The monetary penalties for failing to file 1099s as required are steep, besides. Intentional neglect, or not filing 1099s when you know you should, carries a penalty of up to $ 550 per class, and there is no limit on the sum total you could be charged. Add to that forbid tax deductions and interest for the taxes ascribable on those forbid deductions, and you could cursorily be looking at thousands — or tied tens of thousands — of dollars.
Types of 1099s
There are more than a twelve different types of 1099s. fortunately, most modest businesses only have to concern themselves with 1099-MISC and 1099-NEC. beginning, 1099-MISC is used to report rents, royalties and other, less-common types of payments you might make during the course of the class. Through 2019, nonemployee recompense — money paid to autonomous contractors and non-incorporated service businesses — was besides reported on 1099-MISC. Starting in 2020, nonemployee compensation will be reported on Form 1099-NEC alternatively of in Box 7 of 1099-MISC. This change was made to alleviate some of the confusion surrounding the due dates for the different types of payments reported on 1099-MISC. 1099-NEC will be ascribable to payees and the IRS no later than January 31 each year.
Determining who should get a 1099
Determining who should be issued a 1099 is credibly the most unmanageable depart of the 1099 process. The instructions for each type of 1099 can lead to more confusion than clearness. by and large speaking, vendors will receive a 1099 if all of the follow apply :
- You did not pay them for tangible goods, unless those goods were used as part of a service the seller delivered .
- They are not a corporation or an LLC that has elected to be taxed as a corporation .
- You paid them more than $ 600 over the course of the year .
- Payments were made by cash, assay or electronic funds transfer ( payments made by debit or credit circuit board are reported on 1099-K, which is issued by the payee ’ second merchant serve provider ).
Read more: How Much Does a Roof Replacement Cost?
This is an highly simplified overview and should not be used as your only guidepost to determine who should receive a 1099. consult with your accountant or bookkeeper to determine which of your vendors should receive 1099s. besides, keep in mind it ’ s constantly better to err on the side of caution and issue a 1099 when it ’ s not required quite than not issuing one only to be assessed penalties at a late date. A translation of this article was foremost published on Fundera, a subsidiary company of NerdWallet .