What's a 1099 and What Do You Need to Know & Do About Them?
Restaurant Resource Group
It's that time of year when
restaurant owners and their accountants are scurrying to tie up all
the financial loose ends in preparation for filing Taxes. One of
those tasks is to make sure that any independent contractors that
you paid more than $600 in the prior fiscal year be issued an IRS
Form 1099. You must also file an IRS Form 1096 with the Feds that
indicates the itemized total paid to all such contractors so that
they can "cross reference" these amounts to each contractors
So, who are these "Independent
Contractors" who gets these 1099's, and how do you set up QuickBooks
so that it can generate both the 1099's and the 1096 forms
Independent contractors (ICs) are
simply people who are in business for themselves. They earn their
livelihoods from their own independent businesses instead of
depending upon an employer to earn a living. Independent contractors
are sometimes called consultants, freelancers, the self-employed and
even entrepreneurs and business owners.
As for creating 1099's for your
IC's you must first set up each one as a 1099 Vendor.
Set Up A 1099 Vendor
To set up a vendor as a 1099 vendor:
- From the Lists menu, choose
- Select the vendor for whom you
want to file 1099-MISC forms.
- Click the Vendors menu button,
and choose Edit.
- At the Address Info tab, make
sure the vendor's address contains the two-letter state
abbreviation and the zip code.
- If the vendor is a person, the
vendor's legal name should appear in the First Name, M.I., and
Last Name fields
- If you know the company name but
not the person's name, leave the Company Name field blank to avoid
double names on the 1099-MISC form.
- Click the Additional Info tab.
- Select the "Vendor eligible for
1099" check box, enter the vendor's tax identification number.
- Click OK.
Set Up A 1099 Account
To set up an account as a 1099
- From the Edit menu, choose
Preferences, and then select Tax:1099.
- Select the Company Preferences
- Click Yes, for "Do you
- Choose an account or accounts to
associate with the 1099 categories for which you report amounts to
- Click the Account column and
choose an account from the drop-down list.
- For more than one account,
choose Selected Accounts from the list and place a checkmark
next to each of the accounts you want to use.
- Click OK.
The accounts you select should be
the same accounts you use to track payments related to your 1099
vendors. An account can belong to only one 1099 category. For
example, if you set up an expense account named "Payments to
subcontractors" and you have selected it to track the 1099 category
"Non-employee compensation", you can not use "Payments to
Subcontractors" for any other 1099 category.
Typically, the accounts will be
expense accounts but you can also associate an other expense
account, a long term liability account, an other current asset
account, etc. with a 1099 category.
Note: Your business may not need to
report on all 1099 categories, many businesses report amounts only
for Box 7: Non-employee compensation.
Verify 1099 Data
1099 Detail Report
This report helps you verify the information that QuickBooks
prints on the 1099-MISC tax form. It provides more detail than the
For each vendor, the report lists the individual transactions that
contribute to the vendor's 1099 total. The totals themselves
appear in the Balance column.
The report initially shows only
the vendors specified as 1099 vendors. To list all vendors in the
report, regardless of their 1099 status, choose All Vendors from
the 1099 Options drop-down list in the report button-bar.
Likewise, the report initially
shows only transactions assigned to 1099 accounts. To list
transactions that may have been assigned erroneously to non-1099
accounts, choose All Allowed Accounts from the 1099 Options
drop-down list in the report button-bar.
To go directly to one of the
transactions listed, double-click the transaction.
To create this report
From the Reports menu, choose Vendors & Payables and then 1099
Verify 1099 Vendor Information
Create A 1099 Report
To create a 1099 report that will verify your 1099 vendor
- From the Reports menu, choose
Vendors & Payables, and then choose 1099 Summary Report.
- Note: Be sure the date range for
the report is the same as the one for your 1099-MISC forms. Change
it if necessary.
- Examine the report for missing
- In the 1099 report button-bar,
choose "All vendors" from the list. If a missing 1099 vendor
appears, you need to set up the vendor as a 1099 vendor.
- After all 1099 vendors are set
up correctly, if some are still missing, choose "All allowed
accounts" from the list for accounts.
- Choose "Only 1099 vendors" from
the list for vendors.
- Double-click any amounts in the
- In the Account column of the
1099 Detail report, if you see any accounts that you need to set
up as 1099 accounts.
- Repeat Steps 7 and 8 for each
amount in the Uncategorized column. Choose "Only 1099 accounts"
from the list for accounts.
- Choose "Only 1099 accounts" from
the list for accounts. Note: You should now see all expected 1099
vendors to whom you have paid amounts that total or exceed the
threshold for the 1099 category.
- If a vendor is still missing,
choose "Ignore thresholds" from the list for thresholds. The
vendor may not have met the threshold for the year.
Note: The report covers actual
payments made during the year, regardless of the original date of
the vendor's bill.
Print And Mail 1099s
Printing Form 1099-MISC
Create 1099 reports to verify all 1099 information (vendors,
accounts, and amounts) before printing the forms.
Note: You must be in single-user
mode to do this.
To print 1099s:
- Make sure your printer is turned
on and is online.
- Make sure you have pre-printed
1099-MISC or 1096 forms in your printer.
- If you have a continuous
printer, you may need to adjust for additional thickness due to
- If you have a page-oriented
printer, it's simpler to print copies separately than all at
once. Do not collate your pre-printed forms before putting them
into the printer. Instead, start by loading all the Copy 1
forms. After you have printed all the Copy 1 forms for each
vendor, load and print the Copy 2 forms.
- From the Vendors menu, choose
- Select the time period covering
the 1099-related payments you want in the forms, then click OK.
You can print up to 249 forms. What to do if you have 250 or more
- Click Preview, and verify that
each vendor's address will print correctly.
- To see details of each address,
click Zoom In. When you're satisfied with the accuracy and
appearance of the addresses, click Print 1099.
To print 1096
- Follow Steps 1 through 4 above.
- Click Print 1096.
- Enter Contact Name (name of
person to contact at your company) on 1096 Information window. If
you will not be required to file Form 1099 in the future, check
"This is my Final Return".
- Click OK.
- On the Print 1096 dialog, click
Preview to review the document then click Print.
Correct Invalid Addresses For 1099
Resolve 1099 Errors
The message "You have selected to Print 1099s for one or more
vendors who do not have a valid address on file. Are you sure you
want to continue?" occurs when a vendor's address begins on the
first line of the address box instead of the vendor's name. To
resolve the problem, edit the vendor's record in the Vendor list
and begin the vendor's address on the second line of the address