How To Register My Independent Contractor

Many small businesses hire brusk-term workers or bring on independent contractors to complete projects. Hiring vendors is a bully way to get an expert to help out your business but properly accounting for expenses and their labor is disquisitional.

QuickBooks gives you lot the tools to rails these expenses and file 1099-MISCs for your contained contractors. This commodity'southward goal is to set you up for success, both for accounting and legal reasons.

You lot may be asking yourself, "Why do I need to track 1099 independent contractor payments separately?" Well, let me tell y'all! Separating regular employee payments from contractors is crucial considering of the type of work they do and their relationship to your business concern. Contractors are on-demand or self-employed and exercise work for yous but are not your official employees. Considering of this, you demand to study independent contractor bounty on a 1099 MISC. From financial and legal standpoints, the division needs to be clear.

Additionally, knowing whether someone should or should not be classified equally an independent contractor can be complicated. Intuit has a tool that tin help explicate the difference between a 1099 and a West-2 worker . If you lot are unsure, achieve out to a tax professional person or what nosotros telephone call the source of truth: the IRS website .

The Expenses tab is 1 identify where you can create vendor profiles . If you desire to enter your 1099s data yourself, this is the place for you! Go to Expenses>>Vendors and then click on New Vendor .

You can as well create and manage records for your independent contractors in the Payroll Tab . In QuickBooks Online, you tin can notice your contractors here since they, like your employees, are individuals you pay. Here you lot have the option to electronic mail your vendors and have them fill out the information themselves.

Let's accept a look at the Vendor Information window more closely. You lot fill out a lot of the same information for vendors equally you lot practice for employees. I difference is the EIN (employee's Identification Number) which is entered on the Concern ID line. If you have this number, you'll want to fill it in. If non, you can add it later but recollect to do so before information technology'southward time to file.

In that location's also a checkbox to Runway payments for 1099s. Once checked, QuickBooks will add the independent contractor to the tax filing module.

Before going any further, click on your new contractor's name and brand sure all the information is right. Pay shut attention to their EIN and email address if you program to transport their 1099-MISC electronically.

As e'er if yous need to make whatever changes, click on the vendor'southward proper name and then Edit .

Note: You can use this exact same process to rail an existing vendor for a 1099-MISC. Remember, you volition accept to dissever the expenses associated with products and services you buy from the vendor versus expenses related to their contract labor. Be very deliberate about which account y'all map expenses to on Expense forms.

You tin can see inside the vendor profile where you can add a default expense account.

Speaking of Expense Accounts... Let's create one!

We'll use this for payments made to contained contractors. This footstep is especially important for vendors you too buy products and services from. As mentioned above, expenses for products and services demand to exist differentiated from the work they practise.

Go to the Bookkeeping tab and click on your Chart of Accounts . Create a new account like the ane pictured below:

• Name the business relationship Independent Contractor Labor or something else that makes sense and is easy to call back
• Select Expenses as the Account Type and Price of Labor as the Detail Type
• From now on, every time you enter an expense or pay a cheque to your contained contractors, map those transactions to this new Expense account.

Since you've been tracking their payments exclusively with that special contractor Expense Account, filing the 1099-MISCs will exist a slice of cake.

In Step 2 of the Prepare 1099s module, select Box 7: Nonemployee Compensation. Cull the account you used to pay your contractors. This tells the IRS what money was used for non-employee compensation.

In Step 3 , the Vendors you started tracking will automatically appear on the list. If you lot don't see one of your contractors, only edit their profile using the steps to a higher place and choose the Rail payments for 1099s checkbox. Complete the module and you're prepare to send out 1099-MISCs to your independent contractors.

Tips and Reminders:

• Always be aware of which Expense business relationship you lot're using when yous enter expenses related to independent contractors.

• Use the memo and clarification fields to farther document what these types of expenses are for and then you won't have to estimate during the rush of tax season.

• What'southward nearly important is knowing which expenses apply to the 1099-MISC. This is no easy task, simply the IRS website provides a comprehensive list you can use as a reference.
• If you already entered labor expenses for a Vendor into a different expense account before going through this process, go back and recategorize those transactions into the new "Contained Contractor Labor" account.

There yous have information technology! We went from setting up contractors to expense forms to filing for 1099s. I hope this was helpful and gave you an in-depth overview of how QuickBooks Online handles vendors. Equally always, reach out to the Community if you accept questions. We're here to help!

How To Register My Independent Contractor,

Source: https://quickbooks.intuit.com/learn-support/articles/getting-the-most-out-of-quickbooks/how-to-add-independent-contractors-and-track-them-for-1099s-in/05/966483

Posted by: ellingsonreenter.blogspot.com

Share this post