Contractors are very common in construction and trades businesses. This means it’s important to file 1099-NEC forms for any work you paid for over $600 with check, cash, or ACH. This is not hard to do if you have a Quickbooks Online account. Remember the deadline to file them is January 31st. Let’s go through a brief overview of filing this form. I’m also including a free checklist to help guide you through.
A contractor or subcontractor is an individual or non-incorporated business that you pay to work for you. But not all payments are the same and there is a payment threshold to file the form. Payments made with credit cards, Paypal, or Venmo are not included in a 1099-NEC form. These payment companies file a 1099-K on your behalf. Only payments made with cash, check, or ACH are included. Also, a form only needs to be filed when you paid a contractor more than $600 in the year.
Before filing the form, make sure you get all the information you need (with a W-9) from your contractor. You can then enter them into your Quickbooks Online account as a vendor. Make sure you click “Track Payments for 1099” to keep track of any payments made.
When you’re ready to file 1099 payments, go to the vendors sub-tab on the expenses tab. Click on the “Run 1099’s” button. Double-check your information for any mistakes, then click continue. On the next screen, pick the Non-Employee Compensation category. In the drop-down, choose all accounts that have the payments you made to contractors. Make sure you only choose payments that you made for labor only. On the next screen, check that all contractors are showing up and all the payments are correct. Choose E-file for Me (I don’t recommend paper filing). In the next screen, you will confirm all the information and put in your payment information. Finally, click file and you’re done! Save a download file to send to your contractor.
Congratulations! You’re done with filing for the year! As long as you put in your contractor’s email, their copy is emailed to them right away. I also made a checklist to make this easier for you. Grab your copy here. Protect your business, and help your contractors with their taxes by filing your 1099-NEC on time.
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