QuickBooks Training Post:

January is just around the corner. Soon you will be laboring to create 1099s for your vendors and get them into the mail before the month ends. The IRS copies will be due later, but the copies that should be sent to your vendors should be sent before month-end.

This is not a tutorial on the legal requirements of 1099s. For the sake of our discussion here, we’ll specify a few common policies.

Generally, you are required to send 1099 MISC forms to people and businesses you have paid for services. There is a threshold of $600. So you must have paid a vendor for services, $600 or more over the course of 2015, in order to fall under this requirement.

You do not need to send a 1099 to a vendor that is incorporated.

How can we accomplish this in QuickBooks Online (QBO)?

You must have QuickBooks Online Plus to have this capability.

First, display your vendor list. There should be a button in the upper right portion of the window that reads “Prepare 1099s.” Select that.

Screen 1 displays your company’s address and tax ID number. You can edit this if necessary. See the highlighted edit symbols to the right. Note that if some of this information is missing, like your tax ID number, QBO will ask you to complete that before moving on.

Screen 2 will display those vendors that have been marked during setup as a potential 1099 vendor. Craig’s Design and Landscaping Services only has one vendor selected. That doesn’t seem right so we’ll click on the button that reads “Select vendors.”

A panel or drawer will slide in from the right listing our vendors. We’ll select all vendors that meet the criteria. We’ll look for vendors from which we buy services and are not corporations. We’ll let QBO figure out later if they meet the $600 threshold.

Now we have a much more complete list, but there is a lot of missing information. We can edit these vendors right from here and fill in the missing tax ID numbers.

This is a good reason to start this process early. You may need some time to gather this vendor information if you haven’t gotten it during the year.

As the QBO tip says, box 7 is the most common. That is for the purchase of services like we have been describing. Another possibility is box 1 for rent payments to individuals or partnerships.

There are other types of 1099s and unusual circumstances do exist, so if you are unsure, you need to get some advice on your specific needs.

When we check one or more of the boxes in the screenshot above, QBO will ask us to select which accounts we might use for payments that would properly fall into that category.

For instance, for box 7 we would select expense accounts like subcontractors, accountants, attorneys, repairs, maintenance, and so forth.

Once you have completed this step, click on Next.

QBO found that we need to send out four 1099s. One will be created with an amount in box 1 for the business’ landlord. The other three are for various services we have purchased over the course of the year.

The above screenshot shows the final step. We can send the forms electronically. There is an extra fee for that.

We can also print the forms. For printing, we need to purchase 1099 forms. Most office supply stores will have these available.

Hector Garcia, CPA
Certified Advanced QuickBooks ProAdvisor
7791 NW 46th St. Suite 109
Doral, FL 33166
954-414-1524
hector@garciacpa.com

 

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Source: Hector\’s QuickBooks Blog

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