When you classify a worker as an independent contractor, you set that worker up in QuickBooks as a 1099 vendor, and you may need to issue a Form 1099-MISC at the end of the tax year, depending on how much you paid during the year.
QuickBooks defines an employee as someone you give a W-2 to at the end of
the year. You pay them with paychecks and withhold taxes for them.
QuickBooks defines an independent contractor as someone you give a 1099-MISC
to. You pay them with regular checks, and you do not withhold taxes on their
Use the QuickBooks 1099 Wizard (from the menu, choose Vendors > Print/E-file 1099s) to:
Select the vendors for whom you want to prepare Form 1099-MISC and review their tax IDs and addresses.
Indicate by account the box or boxes on the Form 1099-MISC where vendor payments should appear.
Review vendor payments to be sure that any payments made by credit card, debit card, gift card, or a third-party network like PayPal have been properly marked for exclusion from the Form 1099-MISC.
Review the amounts that will be reported for each vendor.
Choose whether to print the 1099s on preprinted forms and mail them to the IRS or to e-file the 1099s with the IRS using the Intuit 1099 E-File Service. (Either choice lets you print copies for yourself and the 1099 vendors.)
The following additional topics may also be useful in understanding how to set up and pay independent contractors in QuickBooks, how to generate additional 1099 reports, and how to troubleshoot 1099 issues.
About Form 1099-MISC
Turn the 1099 feature on and
Set up QuickBooks to report payments on Form
1099-MISC and 1096
Properly record vendor payments made by credit card, debit card, gift card, or through third-party payment networks such as PayPal.
Pay an independent
1099 Summary report
E-file Form 1099-MISC
forms (not necessary if you e-file)
Print Form 1099-MISC
Remind yourself of
important federal tax deadlines
Resolve problems with 1099 information