1099’s and QuickBooks Online
1099's and QuickBooks Online (QBO). Pretty easy to use. You can set up tracking the first time you pay your subcontractor. As you add the vendor, click the checkmark "to track payments for" and enter their Tax ID. For most independent contractors, this is probably their social security number. If you don’t do this at first, you can always go back and do it later. The best method is to invite them in with the new worker tab in the QBO system.
1099's: Who should get a one?
Most people will send a 1099 to a vendor that fits the IRS definition of a subcontractor. The guidelines from the pdf from the IRS site can be found here. The general rule is that business owners must issue a Form 1099-MISC to each person to whom you have paid at least $600 in rents, services (including parts and materials), prizes and awards, or other income payments. You don't need to issue 1099s for payment made for personal purposes.
1099's: When do I have to submit this form?
You can file an extension if you just cannot get them out in time. Try to get them out by mail on or before January 31, 2018. I prefer to use the 1099 electronic system with QBO. If you watch Intuit's step-by-step video , you will see the steps to produce one. It is important to have all the information on the vendor BEFORE you pay them. I am hopeful that once the worker's section in QBO is available to all QBO users, it will be storing the subcontractor data in the system. So if the contractor already filled in their Social Security or FEIN number, it will be there for you.
Step 1: Set up your vendors
In the navigation bar, click Expenses > Vendors
Click Prepare 1099s in the upper right of the Vendors page.
Click Let's get started (or Continue your 1099s if you've been here before).
Navigate to the Vendors page.
Click Select 1099 vendors.
In the Select vendors for 1099s window, add or remove vendors from the list and click Save.
This is especially convenient if all your vendors are already entered into QuickBooks with accurate names and tax IDs.
Step 2: Set up expense account and code it to the 1099 mapping
Set up expense accounts to track payments to these vendors. Select the appropriate 1099 Box info (category) and corresponding expense accounts, usually Box 7, Non-Employee Compensation. If you have vendor payments that qualify as rents and Non-Employee Compensation, select Box 1: Rents and Box 7: Non-employee Compensation.
If you pay several types of contract workers (such as mechanics and pilots), you may have different expense accounts for the money paid to each type of worker (such as Mechanic Expenses/Compensation and Pilot Compensation). You can choose multiple accounts for box 7.
Once you have done all of the above, just follow the screens to complete the e-file process. E-filing your 1099s does not replace the IRS requirement of providing 1099s to your recipients (contractors or vendors). If you are using the Intuit 1099 E-File Service, you can download and email (or print and mail on plain paper) your 1099 forms to contractors. I recommend emailing using a secure email program like Sharefile.com. If you do not have that, just mail it.