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
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.
Verify that the 1099 feature is turned on in QuickBooks.
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.
Click the Vendors icon.
Click New Vendor.
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
In the Currency field, select the currency you use with this vendor.
For example, if the vendor is France, then select Euro.
If you have an outstanding balance for money that you owe to
this vendor, enter the Opening Balance and "as of"
Are you entering the
correct opening balance?
Enter the information requested in the
Address Info tab and the
Additional Info tab.
(Optional) On the Account Prefill tab, select the default expense accounts to be used for payments to this vendor.
(Optional) Click Next to save the vendor information and enter
another vendor name.
Click OK to save the vendor information and close the
What if I send a 1099 form to a
What if a customer
is also a vendor?
Printing a list
Combining (merging) two vendors
notes about a vendor, employee, or "other" name
and addresses in a form letter
Turn the person into a 1099 vendor.
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?
To do this task
From the Vendors menu, choose Vendor Center.
Right-click the vendor you want to change to a 1099 vendor, and click
On the Address Info tab, make sure:
The vendor's legal name appears in the First Name, M.I., and Last Name
The vendor's address contains the two-letter state abbreviation and the
Click the Additional Info tab.
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
Click the Vendor eligible for 1099 checkbox.
If you don't see this checkbox, you need to set up QuickBooks for 1099
Create an expense
account for the payments you will make to this person.
Working with 1099s