If you own a business, odds are you’ll be tasked with filing and printing a 1099 form at some point. As with most tax forms, knowing what information you need and how to apply, it can be difficult, confusing, and tedious. Luckily, online accounting and booking software like Quickbooks makes it easy to print all of your 1099 forms. If you’ve never used accounting software or filled out a 1099 form, there are several things you should familiarize yourself with before starting the process. Read on to learn how you can start printing 1099 forms with ease through Quickbooks today.
Quickbooks is an online accounting and bookkeeping software developed and distributed by Intuit. You may be familiar with some of Intuit’s other software, such as Turbotax and Mint. Quickbooks is designed to help both Freelancers and Businesses keep better track of their finances. Quickbooks tools make it easy to manage payroll, create financial reports, and prepare your taxes, the last of which apply directly to printing off 1099. Next, let’s go over what 1099 is used for and when you may need to fill one out.
At some point in your life, you have most likely filled out or at least heard of a W-2 form. These forms are provided by employers and record annual earnings at year-end for their employees. These forms are then used by employees to claim deductions on their tax returns. While the 1099 form is less ubiquitous, it is still a major player when it comes to filing taxes. The 1099-NEC is the most common 1099; however, it is helpful to review all the different kinds of 1099 forms to help you better understand the process as a whole and make sure everything is done correctly.
First and foremost, it’s the law. While it may feel easy to shrug off printing your 1099’s, there are expensive repercussions for doing so. You can be charged a penalty between $50-270 per missed 1099 depending on the type of form and how long after the due date they are issued. For a company with lots of contracted employees, this can add up fast and cost you hundreds if not thousands of dollars. The biggest reason why you may be tempted to shrug off completing your 1099 is that you don’t have all the information necessary to fill out the form for your vendor. A good way to avoid this is by making sure that you receive a W-9 form from each vendor as you do business with them throughout the year. The W-9 will provide essential information such as the vendor’s address and EIN or Employee Identification Number. It will also state whether or not they are a corporation, which will determine the type of form you’ll be filling out. While this extra paperwork may seem like a headache, it will save you time and money in the end.
As mentioned above, there are several variants of 1099 forms, each with distinct functions and dates by which they are required to be sent out. Let’s break down the two main 1099 forms and what each is used for so that you can be sure to choose the appropriate one for each of your vendors.
NEC stands for Non-Employee Compensation . This form is used for any person to whom you have paid more than 600 dollars in return for services. These kinds of workers are known as independent contractors and are different from employees. It’s important to note that prior to 2020, NEC’s were included on 1099-MISC forms. Now, you will now have to send one of the two different forms depending on who you paid and what it was for. You should also be aware that freelance workers hired through a third-party source do not require a 1099 from your company since the third-party source is technically the one doing the hiring. 1099-NEC’s are only required for those who have provided services that directly relate to your business and not personal purposes. Additionally, the 600 dollar limit used to dictate who requires a 1099-NEC includes parts and materials used to complete a particular service.
In a 1099 MISC form, the MISC simply stands for miscellaneous . Here is a list of examples provided by the IRS for what is considered miscellaneous work rather than contracted work.
Just like with NEC’s, filling out a 1099-MISC is only required if you paid the individual or company 600 dollars or more. While there are several other 1099 forms, 1099-NEC’s and MISC are the most common 1099 forms and most used by business owners.
Imagine you own an art gallery, and you want to commission a mural of the Scottish countryside on the back of your building. You hire a local artist named Roscoe, who is a sole proprietor (meaning they work for themself) to do the job. Roscoe does a terrific job, and you pay him 1,000 dollars for his hard work. Because you’ve paid him over 600 dollars for his services, you will need to send him a 1099 NEC once tax season rolls around. Later that year, however, you decide to give the gallery a refresh and paint the entire place hot pink. Because of the size of the building, you need to hire a larger company, Perfect Painters Inc. to get the job done. Although you paid them over 600 dollars for their work, you are not required to send Perfect Painters Inc. a 1099 since they are a corporation rather than a private contractor.
When filling out a 1099 form, you are actually required to fill out two copies. Copy A will be sent to the IRS, while copy B is meant for the contractor. You will need to have the following information handy while filling out a 1099 for each of your vendors.
Requesting W-9 forms from each of your vendors before issuing payment will ensure that you have all of the above information when it’s time to send out 1099’s. In order to avoid late penalty fees, It’s also important to be aware of when each form needs to be submitted.
The hardest part of printing your 1099’s is understanding the overall purpose of a 1099 and what each version of the 1099 is specifically used for. Once you have a grasp on that, printing 1099’s with Quickbooks is actually a pretty straightforward process. However, the steps you’ll need to take differ between the different versions of Quickbook software. Below, we’ve broken down how to print 1099’s. Note that these steps are slightly different for the Quickbooks Online and Quickbooks Desktop versions.
You can also order 1099 kits , which come with preformatted paper that is designed specifically to print 1099 with Quickbooks.
While filling out 1099’s may not be the most riveting task that business owners have to complete, it is legally required and important to do it correctly. The better you understand what 1099’s are used for, the easier it will be for you to fill out and print them. When it comes to tax forms, the less time, you have to spend sifting through IRS jargon, the more time you have to focus on growing your business. Luckily, our dear friends at Quickbooks have made the entire process straightforward and simple, giving you one less thing to worry about this tax filing season. Happy printing! Sources: IRS | About Form 1099-NEC, Nonemployee Compensation IRS | About Form 1099-MISC, Miscellaneous Income TurboTax |Penalties for Missing the 1099-NEC or 1099-MISC Deadline Quickbooks | 2020 Pre-Printed 1099-NEC Kits Quickbooks | Create and file 1099s using QuickBooks Online