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How to set up 1099 tracking in QuickBooks, QuickBooks Online, or Xero

January 3, 2013 | By | 7 Replies More

Form 1099 MISC is a Federal “information” tax return that all businesses must produce for every non-corporation vendor (individual, partnership, or estate). Today we’ll talk about how to set up your 2013 1099′s in QuickBooks for Windows, QuickBooks Online, and Xero. See my post about using Track1099 for details on preparing, e-delivering, and e-filing FORM 1099.

While there are several different types of 1099s (1099-MISC, B, C, DIV, G, and INT), this article addresses IRS FORM 1099 MISC, which is the most common form that most small businesses must produce for their vendors.

To determine who in your vendor list needs to receive a 1099 MISC from you, here is an abbreviated quote from the (excruciating) IRS instructions:

File Form 1099-MISC, Miscellaneous Income, for each person to whom you have paid during the year:
… At least $600 in rents, services (including parts and
materials), prizes and awards, … to an individual, partnership, or estate;

  • Any fishing boat proceeds; or
  • Gross proceeds of $600 or more paid to an attorney.

In addition, use Form 1099-MISC to report that you made direct sales of at least $5,000 of consumer products to a buyer for resale anywhere other than a permanent retail establishment. You must also file Form 1099-MISC for each person from whom you have withheld any federal income tax under the backup withholding rules regardless of the amount of the payment.

In addition some payments to corporations (e.g. Attorneys) are also reportable, so read the IRS instructions carefully to make sure you identify and track all vendors who should receive a 1099.

To properly track your 1099 vendors in your accounting software, start by requiring all of your vendors to fill out Form W-9, the Request for Taxpayer Information.

Form W-9

Recording the Information Correctly

Now that you have collected the information you need to record it in your accounting software correctly, so that it will print in the proper place in the 1099 forms. This may seem easy, but unfortunately many accounting software programs don’t make it easy to figure out what data from the W-9 should go into which field in the Vendor records.

In the picture below,  you can see an example of a form 1099 that is “properly filled out.” The example is from the IRS site and it’s an example for how a sole proprietor should be reported. Notice the following:

Recipients Name:

  • Line 1 is the First and Last Name of the individual taxpayer.
  • Line 2 is optional, but it should start with “dba/ “ and then the company name.

Recipients identification Number:

  • If it’s an individual (sole proprietor), you can use their Social Security Number or their Employer ID (EIN). See IRS instructions for more specifics.

1099-Misc

Let’s take a look at how to properly enter this information in several commonly used accounting products.

Here is how to fill in the QuickBooks for Windows vendor fields so the 1099 MISC prints correctly.

QuickBooks for Windows

Here is how to fill in the QuickBooks Online vendor fields so the 1099 MISC prints correctly.

QuickBooks Online

Xero.com differs in that you record this information in a “contact” record. Here is how to fill in the Xero contact fields so the 1099 MISC prints correctly.

Xero contact

Once you have recorded the information in the proper way you can generate your 1099 MISC forms in the required format. Next up – how to easily deliver and file your forms.

In my next post, I’ll show you how to prepare, E-Deliver, and e-File your 1099s.

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Category: Cloud Accounting, For Consultants/Accountants, For Small Business Owners, QuickBooks Online, QuickBooks Tips/Tricks, Working with QuickBooks, Xero

About the Author ()

Doug Sleeter is a passionate leader of innovation and change in the small business accounting technology world. As a CPA firm veteran and former Apple Computer Evangelist, Doug has melded his two great passions (accounting and technology) to guide developers in the innovation of new products and to educate and lead accounting professionals who serve small businesses. Doug is best known for his expertise in QuickBooks as well as driving the adoption of online accounting and small business process solutions. In the early 1990s, Doug was a pioneer in developing the first QuickBooks seminars in the country and has since built the largest group of accounting software consultants in the small business accounting profession. Doug serves on several advisory boards for technology companies and has consulted with numerous industry leaders, including Intuit, Sage, Apple, and Adobe Systems. CPA Practice Advisor has recognized Doug as one of the "Top 25 Thought Leaders" in the accounting profession for the past several years and he has been named to Accounting Today's "Top 100 Most Influential People in Accounting" each year since 2008. Highly sought for his ability to engage and educate accounting professionals, Doug presents at various accounting events throughout the year, including those held by the AICPA and numerous state CPA societies. Doug also hosts the annual Accounting Solutions Conference, attended by hundreds of accounting professionals, industry leaders, and technology developers.

Comments (7)

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  1. Thanks for the mention about Xero Doug, much appreciated (helps our US bookies)

  2. Craig Sands says:

    You have some very good information on e-filing 1099 forms. For users that are more paper-bound, what is your ‘take’ on Intuit’s decision no to support the new 1099 form in versions prior to 2014?

    • For some reason I didn’t get that notice, Craig. I’m asking about it now. In another forum someone said that this wasn’t entirely true, but I can’t say at this time.

      • Craig Sands says:

        I have not gotten it directly. Intuit sent this in an email to one of my clients (they use the 2013 version):

        The IRS has changed the 1099-MISC form for Tax Season 2013. As a result, if you print 1099s from your current version of QuickBooks, the new forms will not be correctly aligned. To solve this issue, two options are available:

        OPTION 1: Complete the 1099-MISC forms by hand and submit them to the IRS. The IRS will accept handwritten forms. Please see http://www.irs.gov/pub/irs-pdf/i1099gi.pdf, section G for IRS guidelines and details.1

        OPTION 2: Upgrade to QuickBooks Pro 2014. Upgrading will save you time by allowing you to print the new 1099 forms directly from QuickBooks with no alignment issues. We realize upgrading might require some extra effort. To make things a little easier, we’re offering 20% off QuickBooks Pro 2014 plus free shipping2 through January 3, 2014.

        • Craig, here is the scoop from Intuit on this.

          First of all, this should only have gone out toe users of users of QuickBooks 2010 and older. THOSE versions do not support the new form (these are sunsetted versions).

          QuickBooks 2011 through 2014 all should support the new forms (as long as you are on a current revision).

          Intuit has a KB article on this at http://payroll.intuit.com/support/kb/2001631.html

          The urgent notice could have been worded better.

  3. Mike says:

    You did not show the “additional info” tab for Quickbooks. It requires the TIN.

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