LUTZ BUSINESS INSIGHTS

 

Are You Following Best Practices for Dealing with Form 1099-MISC?

KRISTEN CURTIS, CLIENT ACCOUNTING SERVICES MANAGER

The IRS Form 1099-MISC is aptly named. It’s used to report various kinds of miscellaneous income, including rents, fishing boat proceeds, and prizes or awards. However, it’s probably Box 7 that gets the most traffic: Nonemployee compensation.

As you may know, the IRS requires you to distribute Forms 1099-MISC  to an individual contractor that you pay $600 or more in the course of operating your trade or business for services rendered. QuickBooks can help you produce the forms every January that are due to contractors by the 31st of January.  You need to do some setup in the software to allow the proper reporting.  The time to do this is now, before you are too far into the new calendar year, to capture the required information as you pay these vendors.

Note: Depending on what version of desktop QuickBooks you’re using, these instructions may differ. Also, QuickBooks Online handles this process in its own way. Contact us if you have questions.

Priming QuickBooks

To get desktop QuickBooks ready to start paying independent contractors, open the Edit menu and select Preferences | Tax: 1099 | Company Preferences. Check “Yes” in front of “Do you file 1099-MISC forms?”

Notice there are links that refer to “mapping” your accounts. Every transaction you create in QuickBooks needs to be linked to an entry in your Chart of Accounts. Please do not try to do this on your own. Making changes in your Chart of Accounts is something that requires accounting expertise. We can help you complete this step.

Creating Vendor Records

You will need to create a record for each independent contractor. QuickBooks considers these vendors. Open the Vendors menu and select Vendor Center. Click New Vendor to open a blank, tabbed record. You can complete much of this information by yourself, but again, you may need our help with “Account Settings.” When you select the “Tax Settings” tab, you’ll see a field for “Vendor Tax ID.” You should enter your contractor’s Social Security number here. Be sure to check the box in front of “Vendor eligible for 1099.” Click OK when you’ve completed all of the necessary fields.

When the time comes to pay independent contractors, you would handle this like you handle any other bill in QuickBooks.

Printing Forms 1099

QuickBooks can help you produce your Forms 1099.  The Forms 1099-Misc are due to  the recipients by January 31st each year.  Proper setup of a vendor is key to facilitate a summarized list of recipients.  You can print the forms yourself or we can assist you.

One More Reminder…

Independent contractors should provide you a Form W-9. QuickBooks does not supply this form, but you can get one here.

Paying independent contractors is much simpler than preparing employee payrolls, but it’s critical that you get everything set up right. We strongly encourage you to call us for assistance.

 

New Call-to-action

ABOUT THE AUTHOR

Kristen Curtis

402.827.2060

kcurtis@lutz.us

KRISTEN CURTIS + CLIENT ACCOUNTING SERVICES MANAGER 

Kristen Curtis joined the firm in 2000 and serves as a Client Accounting Services Manager. She has significant experience in small business accounting and advisory services; new business consulting; and software implementation and training.

AREAS OF FOCUS
AFFILIATIONS AND CREDENTIALS
  • American Institute of Certified Public Accountants, Member
  • Nebraska Society of Certified Public Accountants, Member
  • Certified Public Accountant
EDUCATIONAL BACKGROUND
  • BSBA in Accounting, Iowa State University, Ames, IA
COMMUNITY SERVICE
  • Presbyterian Church of the Cross, Session Member, Christian Education, Committee Member
  • P.E.O., Philanthropic Educational Organization, Member

SIGN UP FOR OUR NEWSLETTERS!

We tap into the vast knowledge and experience within our organization to provide you with monthly content on topics and ideas that drive and challenge your company every day.

Toll-Free: 866.577.0780  |  Privacy Policy

All content © Lutz & Company, PC

 

OMAHA

13616 California Street, Suite 300

Omaha, NE 68154

P: 402.496.8800

HASTINGS

747 N Burlington Avenue, Suite 401

Hastings, NE 68901

P: 402.462.4154

LINCOLN 

601 P Street, Suite 103

Lincoln, NE 68508

P: 531.500.2000

GRAND ISLAND

3320 James Road, Suite 100

Grand Island, NE 68803

P: 308.382.7850