 zero accounting software 1099 reports get ready to be an office hero with zero support accounting instruction by clicking the link below giving you a free month membership to all of the content on our website broken out by category further broken out by course each course then organized in a logical reasonable fashion making it much more easy to find what you need than can be done on a YouTube page we also include added resources such as Excel practice problems PDF files and more like QuickBooks backup files when applicable so once again click the link below for a free month membership to our website and all the content on it here we are in our custom zero home page we set up in a prior presentation scrolling in a bit holding down control up on the scroll wheel currently at 175% zoom in opening the demo doing so by selecting the reset which will reset the data and open the demo at the same time in the setup process we do every time we're going to be duplicating some tabs to put some reports in so we will right click on the tab up top to duplicate it right click on the duplicated tab to duplicate it again tab to the middle and accounting drop down we want that balance sheet report and in the tab to the right let's go to the accounting drop down and open the income statement P&L profit and loss report back to the tab to the middle drop down on the date and we want to customize it for 2022 and bring it up to the 31st that's the setup process we do every time these being the major two financial statement reports all other reports generally giving more information about one or multiple line items on these two major financial statement reports let's open the 1099 report now so I'm going to go to the second tab right click on it and duplicate it again this is the report we're looking at the 1099 so I'm going to go to the accounting drop down let's go to the reports and I can just type in up top let's go just 1099 report now the 1099 report is a little bit tricky because it basically relates to taxes so taxes always complicate things and and so the general idea with the 1099 taxes in the United States we have an income tax so that means that the government is going to have some incentives to try to determine and double-check watch over people's shoulder to determine whether or not they're actually reporting their income they have the leverage to do that on the payer side of things so in other words any kind of transaction there's going to be a payer a receiver a vendor and a customer the the customer has an incentive not to report their income for income taxes because they don't want to be charged income on it the person that is paying or business that is paying often has an incentive of course to want to report it on their taxes to lower their net income their taxable income so the government then goes to the payer side of things and says hey look I would like you to give us information on the person that you are paying so I can double-check to make sure that they are reporting their income we could see this most clearly with employees so the employee when we as the employer pay the employee the government not only says I want you to tell us I want you to give us a w2 in that case telling us what you paid the employee so I can make sure that they report it on their taxes but I also want you to withhold the money from them before they even get it the 1099 is a step away from that so that's one of the things we need to determine as a business are the people we're dealing with should they be designated as employees or as contractors as as 1099 contractors for example the 1099 if we pay someone is basically giving the government that same information or similar information this is what we paid this individual so the government can look over their shoulder but usually we don't have to do the withholdings unless there's some unusual circumstance like they wouldn't give us their social security number or their their identification number so that we could properly report the 1099 now the added rules on the 1099 are basically that in general just to I'll get into the accounting of it is what we're focused on but we have to have some recap of the tax law to do it the government will generally say if they are incorporated if you're paying someone that is incorporated then you might not have to deal with the same 1099 laws so for example if you're paying your utility bill to the giant utility company well the government's not really concerned with you 1099 the giant utility company because they have other controls to make sure that that big company is reporting their taxes theoretically what they are concerned with is the little guy the person that's a contractor a sole proprietor the unincorporated individuals who are more likely to try not to report their taxes right those are the people that the government wants to to make sure so now you got to look through the people that you're paying if they are a big business if they're incorporated you don't typically need to issue a 1099 if they're a small sole proprietor that's when you're likely possibly having to issue a 1099 so now we've got to weed those people out that are the small sole proprietors so that we can determine and run a report to help us to issue the 1099 once we have the report seeing how much money we paid them the 1099 process is usually fairly easy but as we add the vendors we got to tell them that we issue them a 1099 so here's kind of the rules for run the cash payment by vendor report to identify your 1099 contacts so basically as you add vendors you would like to be determining at that point in time whether they're going to be subject to being issued a 1099 or not and mark that off to the vendors edit your contacts in contact management and select add this contact to the 1099 group select the 1099 contact group you populated when setting up your rules so when we think about the rules note that the people that you're selecting to be included in the 1099 groups are are going to be people that are not incorporated typically that are sole proprietors that are over an income threshold although that threshold is so low that basically you can kind of almost discard it and just see if the people are over that threshold but you might have to issue different kinds of 1099s so you might have a miscellaneous 1099 or you might have a non-employee compensation 1099 of the major two so that could complicate it a little bit so now you have to determine which kind of 1099 you're reporting usually it's going to be non-employment compensation for most companies and then for review your contact and transactions then file your 1099s using an e-file partner so then you can have a little video to help you to learn more about it here if you would like to so if i select this cash payment now we have a report here giving us the cash payments that we made broken out by basically the vendors that we paid them to this is the information that we're typically going to be needing in order to help us determine whether or not we owe or we need to be issuing a 1099 for the vendor because this will help us to determine who the vendor is to see if they're incorporated or not and how much we paid them which will help us to determine if they're over the income threshold which is quite low it's like $600 or whatnot to determine whether we need to be issuing that individual a vendor so then if i go back to the first tab edit your contacts in the contact management so this is going to be giving us a vendor kind of a list here so if i go up top we've got the 1099 contact group contacts you've added to the group suppliers and then all contacts so if i set up a group get started by creating your 1099 contact group mark contacts as 10 times 99 contact and manage their details here before preparing and filing your 1099 report so if i create then my contact information it's basically taking us to our vendors now which if i hit the drop down now we've got the all contacts and then if i go into these these contacts i'm going to scroll down and i edit them let's say i determine that one of these is a is someone that i need to issue a 1099 to if i go into the report and say we need to issue that person or that company or whatever a 1099 we'd select that item here and then we might need the information in order to process the 1099 which will typically include possibly a contact information and the tax id number which would either be something that has like a format like this something like that with a or it's going to be a social security number now normally when you work with contractors you would like an ein number which has this kind of two digits and then a dash kind of format i'm not quite sure how many digits are after the dash but something like that because that's usually more professional so because and that kind of gives an indication that they're going to be more professional otherwise you got to get their social security numbers and you want to get that set up first otherwise you get some contractors that are going to not want to give you your social security number after the fact and you're going to run into a problem with your 1099 reporting and whatnot so i'm going to save that now the other way you could do this is you could do it by right clicking i'm going to actually let's do it over here i'm going to go to the first tab you could go to your contacts and you could go to your suppliers and then we could select say multiple suppliers at the same time that we're going to check off and then we're going to say add to the group so we're going to add to the group of 1099 and so add them or we can go to an individual contractor so let's say i go to this one and then i was going to edit it if i edit that individual contractor then when you set up the details for the contractor you're going to want to go to the financial details and say add this contact to the 1099 contact group and once again give the tax whatever number that would be applicable there as well as any contact information necessary for the 1099 so we'll save it and close it so those are a couple ways that you can add your contacts and then once your contacts are added and you've got your groups then you can set up rules now normally you've got your two kinds of 1099s and NEC it's the most common but you also might have the miscellaneous these are a little confusing because the the non-employee compensation used to be on the miscellaneous form but now there's separate forms so most people have got the NEC so if i go into this and i select then the contact for the NEC we're going to have that information here and then you could kind of filter by the accounts that were impacted so if i hit the drop down and i select all accounts then whatever i paid these contractors whatever account we hit then it's going to be reported here and it's going to be normally box one on the 1099 which is non-employee compensation now one way you can distinguish between these rules and these rules like the miscellaneous you can select the same group but maybe you have one account that was like rental expense or something like that that needs to be reported on a miscellaneous report instead of the other one and that's how you can kind of distinguish between these two but oftentimes you'll have all of them go into one area so i'm just going to say uh so i'll just say none i'll keep that one as is and then save okay i had to delete the rule and then save it so then if i go back into my contact manager here it'll give you now i'm showing the 1099 group so now i've got these items in here these three you'll recall that i pulled them in at one time and i didn't include their tax identification so this is giving us that indication look you don't have enough information in order to to process the reports for those three and then if i was to go back to the first tab if we scroll down here we've got our options for the editing of the rules so we looked at the rules here i'm gonna x that back out and then we've got the export so we can export as a csv which is in essence going to be a excel kind of it usually opens in excel it's a comma delineated file that usually opens in excel doesn't have any of the formatting on it though so there's our our information that was pulled through the rules that have been set up and then we've got the select e-filing app so then of course the process is from there uh what's the process to to actually format or file the tax returns meaning you could try to paper file get the 1099s you need fill out the 1099s with the information you have or use an app for the filing service so missing contact details so obviously if i go in here some contacts are missing details necessary to file with the irs these details include so on and so forth and you can go from that point so the bottom line with the 1099s is that it's just an added nuisance on basically like the vendor side of things for our payments for goods and services that is really generally applicable to basically small contractors where we have to make a decision are they a contractor or are they an employee if they're a contractor are they incorporated if they're not then it's likely we're going to have to issue them a 1099 which we need to indicate in some way in the zero system adding them to the group of 1099s so we can at least process a report to show how much we paid them so that we can then issue the 1099s either through you know buying that you know purchasing the forms of the 1099s and so on and doing it that way with the reports or by using an app to help us to you know finish the process up and actually file the 1099 reports through the app through the system