Right Angle: Creating Perfect 1099s–An Expert’s Guide

You may be ready to do your own 1099s, or to do your clients’ 1099s, but is the QuickBooks data you’re working with ready for you?

You’ve heard about the 1099 rule changes and you’ve figured them out, you’ve decided to file 1099s electronically or you’ve got your paper forms ready, and all you have to do is pull the year’s data out of QuickBooks and fill out those forms. Easy enough, right?

But if you haven’t completed the following pre-1099 process, your data may not be telling you the whole story. Did a subcontractor neglect to cash a check? What if a check is in the wrong account? Now is the time to resolve all outstanding issues, and to dig into every single place that 1099-eligble checks could be hiding, from the Balance Sheet to the Profit and Loss Statement. It can take 15 minutes to an hour and you may find that you have many transactions to reclassify, but the good news is that your 1099s will come out absolutely correct. The way you (and the IRS) expect them to be.

Before you create 1099s in QuickBooks

What do I do?

  1. Run the 1099 Summary report by clicking Reports > Vendors & Payables > 1099 Summary. Save it or print it out. You’ll refer to it in the steps below.
  2. Make sure all bank account(s) that you use to process payments to potential 1099 vendors are reconciled through Dec 31st.
  3. Make sure there are no outdated, uncleared payments to 1099 vendors.
    Hint: Run a QuickReport on the bank account(s), filter for “uncleared” transactions, add Source Name to the Columns, and then sort by Source Name. All uncleared transactions are now listed by Payee in alphabetical order.
  4. Dig Dig Dig! Get into every applicable transaction and compare it to the vendors and totals in the 1099 Summary Report. Take advantage of the Transaction Center—it gets specific data out of QuickBooks without making you dig in the dirt running report after report. For example, click Checks in the Transaction Center and every check issued is immediately available and usable, sortable by name, number, etc.
  5. Fix Fix Fix! Open the 1099 Wizard by clicking Vendors > Print 1099s. Use the first step, Select Vendors, when you need to change the 1099 eligibility of a vendor, and use Map Accounts when payments to vendors that are set up as 1099s aren’t showing up on the 1099 Summary report.
    Hint: Change the 1099 Summary report settings from Only 1099 accounts to All allowed accounts .
  6. Compare. As you make corrections to your vendors, your data, and your mapping, the 1099 Summary report will change. Refresh the report after you make corrections and compare it to the data you dig out of the Transaction Center. When the transactions you see in the Transaction Center are showing up in the right places on the 1099 Summary report, your 1099s will be perfect and your year-end is one step closer to completion!

 

 

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