There’s also a checkbox to Track payments for 1099s. If not, you can add it later but remember to do so before it’s time to file. If you have this number, you’ll want to fill it in. One difference is the EIN (employee’s Identification Number) which is entered on the Business ID line. You fill out a lot of the same information for vendors as you do for employees. Let’s take a look at the Vendor Information window more closely. Here you have the option to email your vendors and have them fill out the information themselves. In QuickBooks Online, you can find your contractors here since they, like your employees, are individuals you pay. You can also create and manage records for your independent contractors in the Payroll Tab. If you want to enter your 1099s information yourself, this is the place for you! Go to Expenses>Vendors and then click on New Vendor. The Expenses tab is one place where you can create vendor profiles. If you are unsure, reach out to a tax professional or what we call the source of truth: the IRS website. Intuit has a tool that can help explain the difference between a 1099 and a W-2 worker. From financial and legal standpoints, the division needs to be clear.Īdditionally, knowing whether someone should or should not be classified as an independent contractor can be complicated. Because of this, you need to report independent contractor compensation on a 1099 MISC. Contractors are on-demand or self-employed and do work for you but are not your official employees. You may be asking yourself, “Why do I need to track 1099 independent contractor payments separately?” Well, let me tell you! Separating regular employee payments from contractors is crucial because of the type of work they do and their relationship to your business. This article’s goal is to set you up for success, both for accounting and legal reasons. QuickBooks gives you the tools to track these expenses and file 1099-MISCs for your independent contractors. Hiring vendors is a great way to get an expert to help out your business but properly accounting for expenses and their labor is critical. Many small businesses hire short-term workers or bring on independent contractors to complete projects.
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