How to Set up Contractors and Track them for 1099s in QuickBooks

You can set up your contractors as vendors in QuickBooks. When you need to file their 1099s, you already have all of their information because QuickBooks keeps track of all of their related payments. For each product, follow these steps to set up contractors.

Understand Who Needs 1099

Any non-employee may pay $600 or more in a calendar year (although electronic payments, like those made with a credit card, are not considered).

Get Your Contractors to Fill out a W-9

Having your contractors complete a W-9 before you begin. This provides the information you need to speed up setup. You can download W-9 forms directly from the IRS.

How to Set up Contractors in QuickBooks?

To set up your 1099 contractors choose your payroll service.

1. QuickBooks Online

Step 1: Add a Contractor as a Vendor

In case you haven’t already; enter the contractors as a vendor in QuickBooks:

• Click Payroll and then choose Contractors.
• Then you have to select Add a contractor.
• Enter the information for your contractor or choose the Email this contractor button to have them complete it.
• When finished, choose Add contractor.

Step 2: Track Contractor Payments for 1099s

You must begin keeping track of the contractor’s payments now that you have added them as a vendor.

• Go to Sales or get paid & pay, then Vendors.
• Open the profile of the vendor you want to track
• Then you have to select Edit.
• The Track Payments for 1099 checkbox must be chosen and checked.

Behind the scenes, QuickBooks will start keeping track of all of their payments. The tracked payments can be added to the form easily when you are prepared to file your 1099s.

2. QuickBooks Desktop for Windows

Enable the feature to begin tracking contractors for 1099 payments:

Step 1: Turn on the 1099-MISC Feature

• First, You have to select the Edit menu and then you have to select Preferences.
• Then you have to choose the tax: 1099 menu and then select the tab of Company Preferences tab.
• Do you file 1099-Misc forms? In the section, you have to select yes.
• When you are finished you have to select OK to save your settings.

Step 2: Add a Contractor as a Vendor

• Select Vendor Center from the Vendors menu.
• Choose New Vendor from the dropdown menu, then select New Vendor.
• Each tab’s fields should be filled up. A W-9 contains this information. Later, you can edit and change this info later.
• Select OK when you’re finished.

Step 3: Track Contractor Payments for 1099s

• Select Vendor Center from the Vendors menu.
• Then you have to choose Edit after choosing a vendor’s name.
• Review the information by selecting the Address Info tab:
  • Verify that your ZIP code and two-letter state abbreviation are both right.
  • If the vendor is a person, the First Name, M.I., and Last Name fields should all contain the vendor’s legal name.
  • Leave the Company Name field empty if you only know the name of the company and not the person’s name. They won’t appear twice when you create your 1099-MISCs because of this.
• After that, you have to select the Tax Settings tab and then you have to select and check the Vendor eligible for 1099.
• In the Vendor Tax ID field, you have to enter the vendor’s tax identification number.
• After finishing you have to select OK.

Behind the scenes, QuickBooks will start keeping track of all of their payments. The tracked payments can be added to the form easily when you’re prepared to file your 1099s.

3. QuickBooks Desktop for Mac

Enable the feature to start tracking the contractors for 1099 payments:

Step 1: Turn on the 1099-MISC Feature

• Select Preferences from the QuickBooks menu.
• Then you have to select the 1099s section.
• After that, you have to select and check the 1099-MISC forms are filed box.
• For the purpose of reporting and taxation, choose the accounts for each 1099 type that applies to your business:
  • Choose an account from the dropdown list in the Account column.
  • In order to link multiple accounts: Select Selected Accounts from the drop-down list, then click the desired accounts in the Select Accounts window. Once all appropriate accounts have been chosen, click OK.
  • Not all 1099 categories may be required for reporting by your company. Most companies simply disclose amounts for Box 7: Nonemployee Compensation. Please contact the IRS or an accountant for more details on reporting requirements.
  • Enter the new amount in the Threshold column to modify a threshold amount. This is optional.

Step 2: Track Contractor Payments for 1099s

• Select Vendors from the Lists menu to start.
• Then you have to choose a vendor in the Vendor List window, then click Edit Vendor.
• After that, you have to select the Address Info tab.
• Verify the ZIP code and two-letter state abbreviation are both in the Address field.
  • If the vendor is a person, the First Name, M.I., and Last Name fields should all contain the vendor’s legal name.
  • To avoid double names on the 1099-MISC form, leave the Company Name field empty if you only know the name of the company and not the person.
• Now you have to select the Additional Info tab.
• In the Tax ID field, enter the vendor’s tax identification number after checking the Vendor eligible for 1099 box.
• At last, you have to select OK.

In this above article, you will know how to set up contractors and track for 1099s in QuickBooks. All the information related to this has been mentioned above. In case you still face any issues related to this then you can connect with Dancing Numbers team via LIVE CHAT.

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