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Add a 1099 vendor (independent contractor) in QuickBooks

If you use unincorporated vendors, such as outside consultants or subcontractors, you need to send a 1099-MISC form to those who are paid more than a specific amount per year. Who should receive Form 1099-MISC?

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 behalf.

If you send Form 1099-MISC to any vendors, you can set up QuickBooks to track all 1099-related payments to each vendor. Then at the end of the year, you can print Forms 1099-MISC and 1096 or e-file Form 1099-MISC (Form 1096 is not required when you e-file) directly from QuickBooks.

Before you add a 1099 vendor, make sure QuickBooks is set up for 1099 tracking.

To add an independent contractor

  1. Verify that the 1099 feature is turned on in QuickBooks.

  2. Add the person as a vendor.

    You can add new vendors at any time. QuickBooks uses the Vendors list to hold information about the people and companies you do business with; for example, this list could include the phone company, your office supplies vendor, and your tax board.

    To add a new vendor

    1. Click the Vendors icon.

    2. Click New Vendor.

    3. In the Vendor Name field, enter the name of the vendor as you'd like it to appear on your Vendors list.

      For example, if the vendor is an individual and you list individuals by last name first, that's how you should enter the name.

    4. In the Currency field, select the currency you use with this vendor.

      For example, if the vendor is France, then select Euro.

    5. If you have an outstanding balance for money that you owe to this vendor, enter the Opening Balance and "as of" information.

      Are you entering the correct opening balance?

    6. Enter the information requested in the Address Info tab and the Additional Info tab.

    7. (Optional) On the Account Prefill tab, select the default expense accounts to be used for payments to this vendor.

    8. (Optional) Click Next to save the vendor information and enter another vendor name.

    9. Click OK to save the vendor information and close the window.

    See also

  3. Turn the person into a 1099 vendor.

    change vendor employee

    make vendor employee

    convert vendor employee

    Many users think of this task as changing a vendor into an employee, but when the vendor is an independent contractor, what you really want to do is change the vendor to a 1099 vendor. What's the difference?

    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 behalf.

    To do this task

    1. From the Vendors menu, choose Vendor Center.

    2. Right-click the vendor you want to change to a 1099 vendor, and click Edit Vendor.

    3. On the Address Info tab, make sure:

      • The vendor's legal name appears in the First Name, M.I., and Last Name fields.

      • The vendor's address contains the two-letter state abbreviation and the zip code.

        Vendor name and address

    4. Click the Additional Info tab.

    5. Enter the vendor's tax ID number.

      If the vendor is a sole proprietor, enter the vendor's Social Security number. Otherwise, enter the vendor's nine-digit tax identification number.

    6. Click the Vendor eligible for 1099 checkbox.

      If you don't see this checkbox, you need to set up QuickBooks for 1099 tracking.

    7. Click OK.

  4. Create an expense account for the payments you will make to this person.

See also

KB ID# H_PAY_ADD_INDEP_CONTRACTOR
10/31/2014 8:09:28 PM
PPRDQSSWS406 9102 Pro 2013 76a58b