QuickBooks 1099 Processing

Properly Handling 1099’s in QuickBooks

You might think you know how to process 1099’s in QuickBooks

QuickBooks has had the ability to process 1099 forms from within the software for a number of years.  What you many not know is that there are some sticky points in how QuickBooks calculates the values on the 1099.

  1. First, ensure your vendors have the EIN or SSN in their vendor record (regardless if they are eligible), and IF they are eligible for receiving a 1099, then you select the box indicating such.
  2. In the “account settings” tab in the vendor record, ensure you select the account/s that are being tracked by your 1099 settings so you have consistency with expense tracking.
  3. When entering “checks”  or “bill payments” into a bank type account, ensure that you have a true number in the number field.  If you have sent the payment via ACH, you also want to use a reference number that will include that payment as calculated in the total for that vendor.
  4. When paying a vendor from your bank account by the following, Debit or Paypal, then you need to use one of the following indicator’s in the reference field: Debit, Debitcar, DBT, DBT Card, Dcard, Debit, Visa, Masterc, MC, MCard, Chase, Discover, Diners, Paypal.

Why do you have to go through all of this you ask?

the IRS changed the 1099 requirements a few years ago and now any non-employee compensation made through a third party payor, (such as paying a party by Paypal, Debit, or Credit Card), are exempt from the 1099 rules.  Instead, the IRS requires those third party payors to submit to them any money paid out be reported on a 1099-K.  QuickBooks needs the correct accounts and reference numbers to be used in QuickBooks so that the proper amounts are reported on your vendors 1099’s.

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