The people who are the business owners already know that when they start employing others their responsibility of paperwork increases. This responsibility is very important for their organization. It also depends on the type of contractors you are, such as an independent contractor or employee contractor. Everyone knows that if there is any mistake then it becomes costly.
Dancing Numbers helps small businesses, entrepreneurs, and CPAs to do smart transferring of data to and from QuickBooks Desktop. Utilize import, export, and delete services of Dancing Numbers software.
In QuickBooks Online, there is a benefit of time-saving that is done for you by providing you the feature to prepare the 1099s form for you. You can easily process and file 1099s with QuickBooks Online by using your account information.
Below, you will get a complete guide to know how to process the 1099s form in QuickBooks Online with the IRS when you want to pay cash to contractors.
What is the Difference Between Employee and Independent Contractor?
The differences between Employee and Independent Contractor are mentioned here:
- There is a contract between the employee and employer. Whether it is a contract of employment or benefits such as insurance, vacation, 401k contributions, and more. The employer is required to process and file 1099s with QuickBooks Online for all the considerable persons as independent contractors.
- The classification of an employee depends on the control type of employee from the employer. But the Independent Contractor knows and decides on their own about how and what to work. Also, they won’t have to reimburse the expenses and can dictate the payment for the services on their own.
What is the 1099 Form?
The 1099 form is an IRS form that records your money for non-employee. There are a few types of IRS 1099 forms but you must know about the 1099-NEC and 1099-MISC. There are some due dates to file these forms as these forms are used for Tax filing. You have to file the 1099-NEC form before January 31 and the 1099-MISC form before March 31 if you do it digitally.
How to Process and File 1099s with QuickBooks Online?
For processing and filing a 1099 form, you must be aware of the last date of filing the tax with the IRS. Here is the procedure that you have to follow to process and file 1099s with QuickBooks Online easily.
Step 1: Set up 1099 Accounts in QuickBooks Online
In this step, you have to adjust the account but if you are filing tax for non-employee compensation then it is not required to adjust your accounts according to it. This option is used for the people who have contractors with them. In case, if you are paying them using another mode of payment then you have to adjust the accounts accordingly. Update the same with your accountant.
Step 2: Generate 1099 using QuickBooks Online
Once you have set up 1099 Accounts in QuickBooks Online, then you can either e-file the tax or print and mail it. But first, you must properly organize the payments and contractors. You can run 1099 reports in QuickBooks Online to determine the amount paid to each contractor.
If you want to generate 1099 through QuickBooks Online, follow the steps outlined below:
- First select Contractors from the Payroll menu.
- Or you can also click Expenses.
- Then go to the Vendors option.
- After that, you have to choose Prepare 1099s.
- Once Done select Let us get started.
- Now Examine the Personal Information and make sure it is correct.
- The following step is to mark all of the payment methods you used to Pay Your Contractors during this fiscal period.
- Once Done click on the Next option.
- Then you need to check the Contractor’s Information. If a Contractor’s Name isn’t on the list:
- Select Add from Vendor List.
- Choose the Contractors who are missing.
- Hit on the Button named Next.
- Now you need to check that the amount for each payment method is correct. The payment is divided into 1099-NEC and 1099-MISC forms.
- Once Done next should be clicked.
- Finally, you need to select any of the following options
- E-file for me, for Electronically Filing the 1099s.
- I will file myself, making a printout to mail to the IRS.
- For the payment type mentioned in step 5, most employers choose Non-employee compensation. After consulting with an accountant, you should make a well-informed decision.
- Any electronic payments made to contractors, such as credit/debit cards, gift cards, and so on, will not appear because such transactions are reported automatically by the bank. You should, however, always double-check the amount you paid your contractors.
Step 3: E-file the 1099s through QuickBooks Online
When you’ve already created the 1099s using QuickBooks online, it’s time to file them electronically. Here are the steps to follow if you want to do the same:
- First, when you have finished preparing the 1099s in QuickBooks online, select the E-file for me.
- Now Check the information on the 1099s, then click Continue.
- After that Choose the 1099s that you want to Submit.
- The following step is to rectify the remaining errors.
- You have to go further By clicking the button.
- After that Enter Your Billing information.
- Once Done, hit on the Approve button.
- Then Examine the Number of 1099s.
- The following step is to Review the Payments associated with them.
- Then you must Click the Continue button.
- Now choose a delivery method for the Contractor’s Copies. These copies are used by contractors to file their own taxes.
- The next step is to check the Contractor’s Email Addresses. The forms will be emailed to each of these contractors automatically.
- Then you must Click the Continue button.
- Now you need to Click View Forms to get Copy A of the form that was sent to the IRS. And if you want to find the other copies can be found on the home page.
- Then you must Click the Continue button.
- Finally, you need to select Submit the completed forms.
- If no such option appears, it is because you configured the delivery method when you set up the contractor.
- Examine all of the information before clicking the submit button. Any previously submitted incorrect forms cannot be corrected using QuickBooks online.
- Copy A can be kept as a record of the tax payment. This form does not need to be mailed to the IRS.
Step 4: Verify the Tax Filing Status
Once you create and file an IRS 1099 form, you will be notified of the form’s status for confirmation. This confirmation status will be sent to the email address you provided. You can access the filing status through your e-file account. You must understand the status of your form based on the email you received. There are three statuses that can be written in the email, and they are all explained below:
- Submitted: This indicates that you have submitted the 1099s form through your QuickBooks Online account.
- IRS Received: The tax you filed or submitted to the IRS is being processed or has already been processed. If it is processed, the IRS will send you a confirmation email within a week.
- Not Submitted: You have not submitted the 1099-MISC or 1099-NEC forms.
How to Find a 1099 Payee on QuickBooks
Because 1099 workers are self-employed, neither they nor the contractors you pay on a 1099 basis are regarded as employees of your company. 1099 payees are listed as vendors in your QuickBooks application as a result of this classification. In QuickBooks, there are two ways to look up 1099 payees. The first step is to perform a quick search within the Vendor menu. Running a report with a list of all your 1099 vendors is the second option. The worker’s set-up as a 1099 vendor for tax document issuing can be checked using 1099 vendor reports.
Steps to Find a 1099 Payee on QuickBooks
- On the top of your QuickBooks screen, you have to click on the Vendors tab.
- Now you have to scroll through the drop-down list of vendors and then look for the name of the 1099 payee. You will see that the accounts are listed alphabetically.
- After that, you have to select the 1099 payee. The account for the payee is opened by choosing them from the vendor list. In this screen, you can record payments made to the employee or enter any amounts you have with the 1099 vendor.
Verify the 1099 Vendor Report
- At the very top of your QuickBooks screen, select the Reports tab.
- From the drop-down option, choose Vendors and Payables. Select the 1099 Detail report.
- View the results of the report. The employee is set up in your system for 1099 monitoring if the vendor name for 1099 you want to verify appears on the report. When it comes time to send 1099 forms to the employee and IRS, keeping track of your 1099 vendor payments is important. Set up the vendor as a 1099 vendor if the employee is not listed in the report.
Set Up a 1099 Vendor
- Right-click the vendor you want to categories as a 1099 worker in the Vendor Center.
- Choose Edit Vendor from the menu.
- The vendor’s full address and Social Security number (SSN) or Employee Identification Number should be included (EIN).
- Then check the Eligible for 1099 box and to save, click OK.
You get all the information to process and file 1099s with QuickBooks Online. You have to follow the process from setting it up to filing 1099s for tax. After that check the filing status to make sure there is no problem with your e-filing.
Now that you have a complete guide on How to Process and File 1099s with QuickBooks Online.
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Frequently Asked Questions (Faqs)
Is any Setup required to Set up a Contractor for 1099-MISC before Process and Filing 1099s with QuickBooks Online?
Yes, you have to do the setup of contractors or vendors into your QuickBooks account. After that, you have to file the form 1099s.
Is there any last date to Process and File 1099s with QuickBooks Online Electronically?
Yes, there is a due date to file IRS form 1099 with your QuickBooks Online. The due dates are duffer form to form. If you are filing 1099 MISC then you have time till March 31. If you file 1099-NEC then you have time till January 31.
What if I Want to Process and File 1099s with QuickBooks Online for the Previous Year?
If you use Tax1099 then you may be able to file up to 2 years prior tax years without any QuickBooks integration. Otherwise, it is not possible to file tax for last year or any previous year. You can only process and file 1099s for the prior tax year whether you do it in QuickBooks Online, QuickBooks Desktop, or Intuit Online Payroll Enhanced.
What if I Made any Mistake while Processing and Filing 1099s with QuickBooks Online?
In this case, you have to directly work with the IRS. This helps you to make direct manual amendments to IRS 1099 forms. Follow the instructions properly to do so without facing any issues.
Can I Report the Contractor’s Payments done from the Credit Card after Processing and Filing 1099s with QuickBooks Online?
No, you don’t need to report any of the payments done digitally as it automatically reports to the IRS through your bank. So you don’t have to take any action.
I have Hired Freelancers and Paid them through Check. Do I need to Report Such Transactions?
Yes, you need to report such transactions to the IRS through the 1099s. However, any electronic payments made to freelancers don’t have to be reported.
What are the Steps to Access Previously Filed 1099s Form or Access the Archived Forms while or after the process and Filing 1099s with QuickBooks Online?
You can easily access previously file forms or from archives that are in specific date ranges from January 01 to April 30. The steps to do so are as follows:
In QuickBooks Online, click on the Payroll Tax option
Then, select 1099 filings
After that, choose View 1099 option to view and check PDF copy.