 QuickBooks Online 2024. 1099 reports. Get ready because we don't just do data input. We get totally into it. With intuits. QuickBooks Online 2024. Here we are online in our browser searching for QuickBooks Online Test Drive, looking for the result that has intuit.com in the URL selecting the United States version of the software verifying that we're not a robot. Opening up our major financial statement reports like we do every time. The reports on the left hand side in the favorites. We're going to be right clicking on the balance sheet. Open link in the new tab. Right click on the profit and loss. Otherwise known as the income statement. Open link in new tab. Let's go up to that middle tab that we opened up. Close the hamburger. Change the range. Bringing it back to 2-3. We're going to go from 010123 tab. 123123 tab. Run it to refresh it. First a word from our sponsor. Yeah, actually we're sponsoring ourselves on this one because apparently the merchandisers they don't want to be seen with us. But that's okay whatever. Because our merchandise is better than their stupid stuff anyways. Like our CPA six pack shirts. I must have for any pool or beach time. Mixing money with muscle. Always sure to attract attention. Yeah, even if you're not a CPA you need this shirt. So you can like pull in that iconic CPA six pack stomach muscle vibe man. You know that CPA six pack everyone envisions in their mind when they think CPA. As a CPA I actually and unusually don't have tremendous abs. However, I was blessed with a whole lot of belly hair. Yeah, allowing me to sculpt the hair into a nice CPA six pack like shape. Which is highly attractive. Yeah, maybe the shirt will help you generate some belly hair too. And if it does make sure to let me know. Maybe I'll try wearing it on my head. And yes, I know six pack isn't spelled right. But three letters is more efficient than four. So I trimmed it down a bit. Okay. It's an improvement. If you would like a commercial free experience, consider subscribing to our website at accountinginstruction.com or accountinginstruction.thinkific.com and then we'll tab to the right and close up the hamburger. Same thing. Bring it back to 2023 going from 010123 tab 123123 tab. Run it to refresh it. That's the setup process that we do every time. These are the major two financial statement reports balance sheet income statement. Otherwise known as the profit and loss report. All other reports for the most part providing more detail more information on one or multiple line items of these main two reports. We're now going to look at the 1099 reports and as we do that we're also going to go through a quick overview of basically the 1099 process. Now it's changed recently within QuickBooks. So we have some old vestiges of basically the old system that we had and then we have kind of the new system that is in place. So I'll first locate everything. So we have a few 1099 reports that are currently still in the system. We actually have the old location of the 1099 area which was under the taxes over here and then you have the 1099 filing but the new location now for the 1099s is generally going to be in its own section which you can find under the vendor section or the expenses over here expense center or vendor center and then we have the contractors. And you can also find that same area under the payroll area and then we have the contractors and then on the reports side of things if I go into the reports we have still in here the 1099 reports three reports if you just type them up top you got the transaction detail report the contractor balance summary and the contractor balance detail. These reports might be somewhat obsolete going forward given the fact that you're in essence going to have a report that will be generated once you go through the new kind of widget or portal in the 1099 for the 1099 new center but let's just locate these reports so you can see where they are. If I scroll down we saw them before and I promised I would go back to them. Here's the what you owe. So this is a 1099 report for the contractor balance detail. Here's a 1099 report for the summary of it. So if I right click and open that one I'm going to right click and open this one and then down here we've got the 1099 transaction detail report which might be more of what we possibly are looking for because usually we're looking for what we paid to the contractors within the time frame. So let's just look at those three reports. I'll close the hamburger and do a custom date range going from 010123 tab 123123 tab running it so this is the 1099 contractor balance detail might not be as important with regards to your 1099 preparation given the fact that the 1099 preparation is generally in the United States it's a tax kind of thing that we have to deal with and it's generally going to be dealing with things that we paid to the contractors which I'll define a little bit more detail shortly and so this is what we owe them not what we in essence paid them through the time frame. If I go to the next one this is going to be a custom date and I go from 010123 tab 123123 tab so again this is the balance of what we owe them at this point in time which might not be exactly what we're looking for when we're trying to make our 1099s and the last one if I go over here and make a custom report going from 010123 tab 123123 tab this one gives the transactions for the time period it's a period report which you would think would be closer to what we need to make the 1099s but there's nothing currently in it and again I think that's partially because these are reports maybe designed more for like the old system and now we have kind of reports that are basically generated within the widget so I just want to point that out now what are the 1099s quick recap on what they are in the United States we have an income tax so we have to pay our income taxes but the IRS would also really like to have the employers as their tax collectors right they want to make the employers the business owners the people that do the IRS's work right they collect the taxes for the IRS so that's why typically if you have people that you want to hire for the business you have a couple different options one you could you can hire them as an employee however if you hire them as an employee then you're going to have to deal with a lot of regulations including withholdings that you'll have to deal with taking the money from your employee payroll tax withholdings and then pay that to the government you're acting as the government's tax collector in that case you can try to have them as a contractor instead of an employee but you must be careful in doing that because you want to make sure that they qualify as a contractor and the IRS tries to put up rules to act like there's a big line between an employee and an employer when in reality it's somewhat of a gray area right and the IRS is leaning more generally to try to get people to have to record people as employees because then they can make the employer collect the taxes for them they make them into the tax collector so if you hire someone as a contractor though then that would mean that they have generally the rules to do that hover around the idea that the contractor has more independence they're not in the office you're not directing them like every hour for example that would clearly be an employee if you're telling them what to do giving them all the resources to do it however if you're giving a job for someone to do and you're not managing them every step along the way possibly then they can be a contractor in which case you don't have to issue a 1099 I mean sorry you don't have to issue a W-2 but the IRS would still like a 1099 which means you're kind of spared the withholding pain of the payroll system but the IRS still wants you to kind of I would think of it in derogatory terms ratting out your contractors to the IRS to say hey look they've earned this money I'm not going to take the money from them directly because you didn't make me government but here's where their address here's their social security number or EIN number you go after them IRS and so that's going to be the general idea so that means that it's going to be people that we paid money to which means on the income statement we've got information that's related to the expense accounts usually because when we pay for things they are expenses now most of the things we pay for however we pay to people or corporations if the entity we pay to is incorporated like we pay our Edison bill utility bill the normal kind of expenses to the big businesses out there then we don't typically have to worry about 1099s because we only have to give them out to people that are sole proprietors or who are not incorporated so that's the ones that those are the vendors that we're looking for we're looking for the ones that are not incorporated the little guys that's the one because the big guys the government already feels like they've got them under their thumb the government's like we've got them no worries we're going to take their money but the little guy might fly under the radar so the IRS wants you to make sure that you get that guy and tell them the social security number and what not that the person that worked for you so if you hire a contractor as a sole proprietor then whenever you do that you want to try to get their information so that you can do your 1099 thing now what if you don't do it well then the IRS could charge you penalties and interest they hit you with the stick if you don't do that so that you have to be in compliance that's the idea so that's the general idea so these reports I believe now it's becoming that you have to basically file electronically so as technology gets better as we can see we can do the in data input more easily QuickBooks is amazing and our reports that we can do and everything but obviously what's going to happen from the government standpoint they're going to want more information they're going to want more control so now the IRS wants more information they want a digital process possibly of the information that goes to them so you might still be able to do that outside of QuickBooks or within QuickBooks you might have to pay for it no matter what you do possibly so you can kind of shop around to see what the best deal would be but obviously you're going to get the information from QuickBooks if you're using QuickBooks to do your bookkeeping so the general idea would be then when you take on new vendors if I go into my expenses area here and this is my vendor center when we take on new vendors that are not incorporated we hire contractors then you want to make sure that when you set them up you set them up as a contractor that you're tracking for 1099s so you can easily issue the 1099s couple ways you can do that the old way that we used to that you can still do I believe is you can go into the vendor up top and we can say if we're adding a new vendor let's say this is vendor number one vendor one now if they're a contractor we're typically going to want an email so let's say it's test email at let's say at gmail.com we're going to typically want their phone number 909 doo doo doo doo doo doo and then we've got their contact information and then we want their address I'm just going to pick one in Beverly Hills 353 South Reeves Drive South Reeves Drive Unit 202 let's say this is going to be in we're going to say Beverly Hills Beverly Hills California and 90210 I wanted to be maybe it wasn't but there it is I don't know exactly the county we'll keep it with that and then if I scroll down I think it's Los Angeles so I'll put it in Los Angeles so we're going to if you issue the 1099 then remember you're basically ratting out the person to the IRS so the IRS can go after them for income taxes so the IRS wants to know who they are name they want to know their address you probably want to have their phone number so you can contact them in case there's any issues with this information so you don't get hit by the IRS and then their their taxes they might have either a social security number hopefully when you're dealing with a contractor they will have an EIN number even if they're a sole proprietorship and they don't have any employees they could get an EIN number if they don't want to give you their number because it's their social security number then you probably don't want to do business with them because you won't be able to fulfill your obligations and therefore you're leaving yourself at risk to the IRS so usually the business ID number is usually pretty easy to get on the IRS website even if you're like a sole proprietorship so you probably want to be working with people that have something like a 99- number as opposed to the social security number but if they want to give you the social security number and you want to work with them then that's fine too but if they refuse to give you any number because they don't want to give you the social security number then you might not want to do business with them because you're not going to be able to meet your obligations for the 1099s and that means you're putting yourself at risk for the IRS side of things so then if I do that that's one way we can add the vendor we checked off that we had the 1099 now the other thing we can do is if I go to this contractors tab so now this is the area where we can pick up the information from the contractor now we could issue the contractor basically a W-9 that's going to be one way that we can request this information that we need and you can possibly do that within QuickBooks now by adding a contractor and then we have the name and the email and it says email this contractor to complete their profile they'll get their own account to safely share their personal details so this is the other way that you can invite a contractor you could say okay we use QuickBooks I'm going to give me your name and your email address and I'm going to send you out the information and then they're going to have their own little portal on their side that they can open and deal with their contractor which might be useful because they might be able to deal with other contractors that use QuickBooks as well or contract with other businesses that use QuickBooks to kind of manage that kind of information so this is the other way that we can get that information now if you want to look at a W-9 form from the IRS you can go to IRS.gov and simply type in W-9 so we'll type in a W-9 and here's the W-9 form so we have the name as shown on your income tax return because this is information related to their income tax that we're ratting them out to the IRS we need their name business name, disregarded entity name if different from above check the appropriate box for the federal tax classification as the person whose name is entered in line one check only one of the following seven boxes so are they the individual sole proprietor or single member LLC a C-corporation, S-corporation partnership trust usually you're going to have people that are going to be on this first box that you're going to be dealing with because usually those are the people that you're required to give the 1099 to often times so then we have the limited liability company order then we have the address down below city, state list account number list account number here and requesters name and address which is optional we have the taxpayers identification number this is the TIN which you can see could either be the social security number or the employer identification number so pretty basic form doesn't have too much involved with it but you can see those are the basics that we basically put into the system when we have a new vendor you're going to need that basic information because that's what the IRS is going to want for you to issue the 1099 so within this widget window then we're going to have the list of contractors that we have basically ticked off that 1099 box or we added them from the add a contractor area we can sort and filter the contractors here we can take actions such as looking for active inactive or all of the contractors the contractors that are inactive will typically not be showing up by default because they've been made to be inactive then we've got the prepare 1099 which we'll take a look at in a second we saw that we have the add a contractor which is the one way or one of the ways that we can add a new contractor by giving them basically an email so they can fill out that information we can pay the contractors this way if we go into here we can pay it in a similar process as we do with the payroll however a lot of people I think might not be doing that so if you're not doing that I don't believe that you have to worry because you're not really required to do this whole separate system to pay the contractors in a similar way as you would with the payroll that would be added if it's possibly convenient for you to do I would think that a lot of people would probably still be paying your contractors using the standard form like a check form or possibly an expense form like they pay most of their vendors it's going through the vendor section you're paying them and possibly adding it as an expense form when you're doing the bank feeds for example so the contractors have not become so tedious yet by the IRS adding a bunch of rules and whatnot that we have to kind of pay it in a separate hole another widget as we do with the payroll although again I would think that the IRS would like that to be the case and possibly is trying to work towards that being the case so that they could possibly have you collect on the 1099s as well but we'll see what happens in the future in any case then we would prepare the 1099s and so we have this one that says file 1099s with a head start so let's wrap up your 1099s and 1099s in EC these are the two major 1099 forms we'll take a look at them in a second these are informational forms the reporting forms the miscellaneous used to be the main one but now they broke out the box that we used to use in the miscellaneous to the NEC which is now the main one by the way also I believe this still stands for miscellaneous MISC but when you look at the recordings from QuickBooks Online when they talk about the 1099 MISC they pronounce it 1099 MISC they pronounce the C which is kind of funny I don't know why that is because I think it still stands for miscellaneous and the C is silent I'm thinking possibly it's a gender thing they don't want to call it MISC 1099 like if it doesn't want to identify as a miscellaneous I don't know I don't know your guess is as good as mine it's a crazy world these days but I still think the C is silent but in any case you can pronounce it either way 1099 MISC this is the main one now 1099 NEC often times for small businesses so you'll have the option to print and mail the form or have us file online with the IRS and send digital and paper copies to your contractors and vendors so in other words you could try to file whichever way that you want to file the 1099s that's available way to you provided by the IRS regulations and you might get the information from QuickBooks and then use that to file the 1099s in whichever way that you think would be best for you or you can transfer and totally file it through the QuickBooks which means you might have to pay more or not it'll depend on the level of subscription that you have also note that 1099s we're usually thinking about the federal 1099 forms here sometimes some states might also require a 1099 form but that will be dependent upon the state that you are in and because the states are all different like with the payroll in this case QuickBooks might have the ability then to allow you to process the state returns but some states might not have that compatibility they might want you to process it on their website or something like that so if you are required to file state 1099s then again you can probably get the information here and you may be able to use QuickBooks but you have to look into that process and it's located so January 1st to May 7th online filing is available January 15th last day for early bird discount January 28th at 5 p.m. pacific standard time last day to send tax payers copies on time so then we have the company information down below which is required they will not let us go forward from here because we don't have the tax in place so I'm going to go into another file so we can move forward from here ok so the next step looks like this it says select accounts used to pay contractors and vendors so you'll show your list of your accounts so you select the ones you used in 2023 then you'll categorize those accounts by assigning them a box from form 1099 form so we can run reports of accounts used to pay 1099 vendors run reports of all vendor payments so if I open I'm going to right click on this report and open in a new tab so if I open that over here it looks like this so this gives us a report which this looks like the new and improved report right other than the last reports that are currently in the report center now notice that this one is filtered by the 1099s already you can see the filters over here so if you're trying to look through all of your vendors to see if you need to mark them off as 1099s you could use this report and just delete this filter and then look at all your payments although it gives you a lot of detail so let me just point out that if you don't know if you don't know you didn't mark off the people that you might need to send a 1099 to then you've got to go home through your vendors and figure that out and let's just go through a few options you might use to do that I'll go back to the test drive file over here so you could like if I go into my expenses area in my vendors then you could go through basically your vendor list here and try to figure out which of these vendors you need to issue a 1099 to you're looking for the ones that are not incorporated basically that you need to basically then add and that's going to be that's the general idea now there's also a dollar limit which is fairly low it's like $600 but basically when you mark them off in this area you want to mark off all of the ones that you would have to give a 1099 to if they were over the limit by checking off that box getting their email address getting their phone number and getting their address and their EIN or social security number for those vendors now if you have a really long list of vendors or if you want to look at the balances that you paid the vendors as well the reports that you might want to go to is like for example we saw this report down here for the expenses and vendors and we saw the expense by vendor summary so expense by vendor summary if I open that up then now we've got at least the expense accounts that we posted payments to and I'll change the date to custom date from 010123 123123 tab and this might make it a little bit more easy if you have a whole lot like some people might have tons of vendors that you did business with over the last 20 years that you've been using QuickBooks or something but you don't have actual balances that you paid to them in the current year so if you run something like this at least now you can see the people that you actually paid which might be a smaller list and then you can go through this list and try to see if these particular vendors are incorporated or not and if they're not then you can look into trying to get the information from them that you might need to file a 1099 which would be sending them that form if you can or a W9 form to get the information and then going forward what you want to do every time you add a new vendor is to make sure that if they're not incorporated you pick up that information up front and if you can't get it you typically don't do business with the vendor because it'll be like your head on the chopping block at that point so in any case if we go back on over here we're going to say select account okay so we did that so now we can select the accounts that we're going to have 1099s going to go into this report says select accounts used to make payments to vendors and contractors run report of the chart of accounts used run report of all vendors paid so you could go through here and think about often times when you pay like a contractor for many small businesses at least it might be always going to one particular account that you're paying like contractor payable or contractor expense or something like that that you're paying it to but it's possible that you might be paying contractors that you're charging to a bunch of different accounts depending on the industry that you are in so so you would like to basically usually select more accounts then then possibly you're actually charging to what you don't want to do is miss the account that you actually paid through because if you do that then you didn't you didn't issue the proper 1099 and that can cause you problems so the easiest thing to do is you can select all the accounts and then any payment you made to a contractor would then be picked up because now no matter what account it went to if you paid it to them then it would be picked up so that's kind of what I'm going to do here but in practice you probably you could probably be more specific in practice picking the the accounts that are going to be charged to with a particular contractor but on the test I want to make sure I picked the account that was with the contractor test contractor that I made so I'm just going to add them here the whole thing to make sure that I have the one I want that was a lot okay I'm going to add them so there they are now if you have them in this list already then of course you can go through this list and delete any ones that you don't think should be in this list and you can continue to add them from here if you need to so now we need to assign the 1099 box that will be selected so remember this widget is mainly for the two 1099s which are going to be the 1099 miscellaneous which looks like this and then the 1099 let's take a look at this one first NEC is now kind of the most common one for like general contractors and usually you're going to have box one populated which is the non-employee compensation which is the typical 1099 for many people you might have the federal income tax withheld if there was withholdings but you might not be required to do withholdings if they're a contractor as opposed to an employee that's kind of one of the benefits of having them as an employee and then doing their contractor they could pay their own taxes with it so you can just you know pay them their normal fee if you go into the miscellaneous then what's left in the miscellaneous is all this other stuff so you got the rents royalties other income which now again might more often be over here for non-employee compensation which before might have been in other income so you want to check to make sure that you're in the right box there federal income tax withheld if there was any fishing boat medical and health care we've got the payer made direct sales totaling 5,000 or more and so on and so forth so the main one usually is going to be like rents and royalties are usually what this form is going to be for so then we can assign these if I look at the boxes then we've got the rents that's for the 1099 miscellaneous most of them are going to be non-employee compensation so if I'm just going to use the general concept if you are a small business and you're paying contractors as opposed to having the employees you're probably going to be using the 1099 NEC and putting them all in here unless you have like rents or royalties so I'm going to put them all to that box one of the NEC as a general rule if you have a more complex situation you're going to have to dig down into it a bit but here's the general idea okay so I've added all those I'm going to say next now so the next one says we have the review payments so review recipients and payments total we pre-selected contractors and vendors you've been keeping track of for 1099s and who meet the IRS threshold for reportable payments in 2023 review the list of folks you didn't track for 1099s to make sure no one was left out so in other words this is kind of like the report that our QuickBooks has basically whittled down meaning they basically just took all the ones that you checked off as being necessary to issue a 1099 to by issuing them the email or by taking off that box saying that they need to be issued a 1099 and it's over $600 right so that's who's showing here now if you hit the drop down you could say non reportable payments only so this is the one person or what and I know these are companies that I've checked off here as an example so obviously AAA and Costco would not be people that we would be issuing a 1099 to but these are just examples so I could show you as it flows through here it would be a sole proprietor would have it but in any case so on this one we ticked off the box meaning we ticked it off that they need to be issued a 1099 but the dollar amount was under the threshold and therefore we don't have to issue them a 1099 so let's go back to the first one so there and then this one says not tracked for 1099 so these are all the vendors that we didn't check off the box for or send the W-9 form either electronically or whatever to so the box isn't checked off so we're going to say all right that's the only one we'll say for practice problems so I'm going to say next then so now we have the information for the total of the NECs which is what I put it for that's one of the forms the 1099 versus none for the miscellaneous by the way if you're doing this outside of QuickBooks you're using QuickBooks to gather the information and then filing using some other software then this is basically you can get the information that you can then populate into whatever other whatever you're using to file the 1099s so here's but here's the information here so the preview the forms and then we can continue next to see if we can process the forms through QuickBooks and then of course you come to the payment screen so the payment information will be dependent in part on you know what subscription model that you have whether it be included or not but just as general rule you've got how would you like to file please select an option to proceed with e-file so you got the contractor payments pay contractors with next day direct deposit e-file unlimited 1099 and stay ready for tax time this is $15 a month so I'm not sure if that would be worthwhile or not I mean it kind of depends on how many contractors you have because that's a monthly payment of the $15 a month so unlimited direct deposit for your 20 contractors plus $2 per additional contractor 1099 e-filing included so if you if you have that again it's $15 so you would think I would assume that you would have a decent amount of contractors that you're trying to manage in a similar way as you manage the payroll to make that a worthwhile thing to do however if you're small business you don't have that many contractors and if you're not paying them like you do basically through payroll with direct deposit and whatnot then you would think it might be more reasonable to simply use what QuickBooks comes up with to either then use whatever cheapest filing system that you could file your returns with or file with QuickBooks possibly with a one time fee so you'll fill out the form and file online with the IRS on your behalf so that's the $399 that's probably what I would go for in any case so but again if you have a lot of contractors maybe over here but the point of the 1099 is that it's not payroll yet it's not that difficult so I would think it might get there to where the IRS will require withholdings and whatnot and possibly if you have complex things going on it might be more complex but again the one time fee here or you can possibly pay with another or you could possibly use this information to process with another system so note that this widget is kind of the all in one area so we talked before about the three forms that are 1099 forms those seem to be somewhat of old vestiges from the prior system maybe not be as useful currently because everything is kind of housed in this widget and then we had again that old vestige of where it used to be under the tax system where now linking it to the concept of payroll and putting it under payroll and in the vendor area so that's the general idea with the 1099s