How to Generate 1099 in QuickBooks?
If you are an owner of a small business and need to issue tax forms to all individuals involved in your business, then there are two different kinds of forms you can use. If the individual is an employee of your business organization, you can issue a W-2 form, and if not a contractor, you have to fill 1099 form. In this form 1099, you must state the total amount you have paid for their services in the entire taxation year.
QuickBooks can help keep track of the money paid to any contractor and can automatically fill a printable 1099 form with all required data.
This article will teach us how to generate 1099 in QuickBooks. But before that, let’s know in detail about the 1099 forms.
Form 1099 is a tax form by the IRS called information return which means you will fill out that form as a basis of your business whereabouts. There are different kinds of 1099 forms, out of which 1099 –MISC is the most commonly utilized for reporting miscellaneous income.
Importance of the 1099 Form
Being the owner of any business, you should report the amount you pay to your independent contractors for the work you outsource. All contractors depend on 1099s for tax filing and pay taxes for being self-employed.
Outsourcing your business works to contractors is important for developing your business. You can outsource your projects and other services without hiring a full-time employee. However, you must properly understand the differences in reporting payments for your employees and independent contractors.
Neglecting this can lead to problems with the IRS, including an accumulation of penalties.
Who Receives a 1099 Form?
Any individual who works as an independent contractor and receives a minimum of $600 as non-employment income in a calendar year receives the form 1099.
This mainly includes –
- A worker who is not an employee.
- A self-employed individual.
- An LLC that is not accountable for tax.
- Anybody who has control over how and when they will work.
How to Generate a 1099 in QuickBooks?
Generally, there are two main ways to generate and send 1099 forms for individual contractors.
The first option is you can buy a 1099 kit and then print those forms by yourself from a QuickBooks file and the second option is you can make payment to QuickBooks for printing and mailing your documents.
The second option is easier than the first option as it is a little tricky to line up all 1099 forms perfectly in a printer. And if you buy the forms early, it becomes easier for you to get them.
Here are the steps to generate a 1099 in QuickBooks
Allow 1099 Option
- Open QuickBooks, and click on the option “edit” in the menu bar.
- Choose “Preferences” from the drop-down menu list, and then choose “Tax 1099: present on the left-hand side of the window.
- Now click on the “Company preferences” option and then choose “yes” in the section “Do you file 1099 MISC forms”. Select “Ok.”
Setting up Vendor
- Select “vendors” from the list of the menu bar.
- Now choose “Vendor center” from the drop-down menu list and then right-click on “independent contractor,” the person for whom you want to generate the 1099 form. Now choose “Edit.”
- Select the “address info” option and review the contractor’s data to ensure it is correct. Now click on the “Additional info” option.
- Select the “Vendor eligible for 1099” option. Give the tax ID number of the contractor in the “Tax Id” section.
- Choose “OK”.
- Put the blank 1099 form into your printer and then choose “File” in the primary menu bar of QuickBooks.
- Choose “print forms” in the drop-down menu. Then choose 1′ 1099s/1096″ present in the list.
- Choose the person you need to generate the 1099 form and select the option “Print 1099”.
- Now you can see a preview of the 1099 form that opens up automatically. To see it in detail. You can deselect the “Alignment” box and then choose “PDF.”
- Now hit the option “Open PDF in preview” to see all data in the form.
- Then click on the option” Print” to print the completed form.
Also Read – How to Find Gross Receipt in Quickbooks?
You can easily generate a 1099 in QuickBooks and give your contractors. It would help if you kept in mind that you can always view the information in 1099 by opening the “Reports” tab on the left part of the QuickBooks website. Go to the “expenses and vendors” part and select “1099 transaction detail report”. It is often good to run the report every quarter to ensure you have entered all information perfectly and on time.