Accounting, Bookkeeping, and QuickBooks Tips for Small Businesses

Posts tagged Form 1096

QuickBooks Tutorial: How to Prepare 1099 and 1096

Tax Return_Form 1099Jan 31st is just around the corner. That means you only have a few days left to prepare and send your 1099’s. Last week we discussed 1099’s – what is a 1099, who gets a 1099, and when 1099’s are send/received. This week I want to walk you through how to prepare 1099’s using QuickBooks. Don’t forget your 1099’s must be mailed to your vendors no later than January 31, 2011.

The quickest and easiest way to prepare your 1099’s is by using QuickBooks’ 1099 and 1096 Wizard. The QuickBooks 1099 and 1096 Wizard provides you with 4 steps to easily verify your information, review your data, and double check that your numbers are correct before printing your 1099’s.

To access the QuickBooks 1099 and 1096 Wizard, click on the Vendors menu and choose the Print/E-file 1099s… option. The wizard will open and will suggest you take the following steps:

  1. Review Your 1099 Vendors – The Vendor 1099 Review report is helpful so you can verify that the vendors who should be receiving a 1099 are marked “yes” and to double check that the vendors marked “yes” have a Tax ID number and a complete mailing address.
  2. Map Your Accounts to Boxes on 1099 – This window allows you to select the account (general ledger account aka chart of accounts) you want to be reported on the 1099’s. You can assign multiple accounts to each 1099 box category, but you can not assign the same account to multiple 1099 categories. You will also want to verify the threshold (minimum) amount you must report to the IRS matches the current IRS rules.
  3. Review Your 1099 Data – The 1099 Summary Report opens, providing you with the opportunity to see each vendor that is eligible for a 1099 and the amount paid to that vendor. Please note the report is sorted by Box Number (which box the amount will be reported in on the 1099). You can double click any vendor to see the details behind the total amount showing on the report. If you notice a check or bill was originally posted to the wrong account (i.e. it’s not showing up on the 1099 or it’s being reporting in the wrong box), you are able to go back and change the account on the the check or bill. I recommend printing a copy of the report. It is a good tool to double-check all 1099 vendors are included.
    Additional Steps to Ensure 1099 Reporting Accuracy

    1. First, open Quickbooks’ 1099 Details report. To access the 1099 Details report, go to the Reports menu and select Vendors & Payables. Then click on the 1099 Detail option to open the report. Make sure the report dates are correct, choose the “All Vendors” option, and the “Only 1099 Accounts” option. Refresh your report. Look into any vendors that show up on your QuickBooks 1099 Details report that do not show up on your QuickBooks 1099 Summary report. If you find vendors who are supposed to receive a 1099 – open their vendor record and click the Form 1099 button on the Additional Information tab and verify you have their Tax ID Number and mailing address.
    2. Secondly, in the QuickBooks 1099 Details Report change the 1099 Options to: “Only 1099 Vendors” and “All Allowed Accounts.” This new version of the 1099 Details Report allows you to verify the amount you are reporting on the 1099. If you find any vendor payments that were accidentally posted to the wrong account, you can double click the listing to open the transaction to change the account. After making the change, refresh your report to make sure the amounts match.
    3. Once the vendors and amounts have been verified for accuracy, you are ready to print your 1099’s.

  4. E-file and Print on Plain Paper OR Print on Preprinted Forms
    1. QuickBooks 2011 is the first version that gives you the option to file your 1099’s electronically through QuickBooks. Click the Use Intuit 1099 E-File Service button to proceed to file your 1099’s electronically. Note: if you file your 1099’s electronically, you do not need to file a 1096. Another nice feature is that you are able to print your vendor’s copies on plain paper, so you do not have to worry about buying and printing on the preprinted forms.
    2. To print your 1099’s and 1096 on preprinted forms, click the Print 1099’s button. This will walk you through printing your 1099’s and 1096 on preprinted forms. Preprinted forms can be purchased at most major office supply stores (i.e. Office Max) or ordered for free from the IRS. Printed Form 1099’s and Form 1096 will be filed with the IRS by mail.

Keep in mind most 1099’s need to be mailed to your vendors by January 31st and then filed with the IRS by February 28th, 2011.

Additional Resources
Instructions for Form 1099-MISC (2010).

Form 1099-MISC (2010)

Instructions and Form 1096 (2010)

A Guide to Information Returns

Information about the FIRE System (electronic filing)

Form W-9

Who Can Help You File 1099’s
If you get stuck or have questions, contact the IRS, your lawyer, or your CPA.

____________________________________________________________

Michelle Edwards, CPA - QuickBooks Consultant Written by Michelle Edwards, CPA
Certified QuickBooks ProAdvisor

Michelle is the owner of Trailhead Accounting Solutions CPA, LLC, an Erie, CO based CPA firm focused on providing small and mid-sized businesses with day-to-day accounting, bookkeeping, and business solutions. Michelle is a CFO turned consultant who loves working with small businesses and entrepreneurs. When she’s not crunching numbers, she can be found hiking, remote camping, gardening, quilting, and hanging out with her family.

Form 1099-Misc, What You Need to Know

Tax Time Blocks_Form 1099It’s January and that means 1099’s must be sent to your subcontractors and vendors by the end of the month. If you operate a business, chances are you owe at least a few people a 1099. If you’re a sole-proprietor, partnership, or LLC you will probably receive a few 1099’s from your customers as well. Read on to learn more about 1099’s.

What is a 1099
1099’s are informational returns required by the IRS. There are several different types of 1099’s that are used to report a variety of payments – interest, dividends, trade or business payments, credit card merchant reporting, etc. Today we are focusing on the 1099-MISC, which is used to report payments made in the course of your trade or business.

Who Prepares 1099’s
If you own a business, you will be responsible for sending a 1099-MISC to anyone you paid $600 or more in the course of your trade or business. Some examples include rent, services, payments to subcontractors, parts, materials, prizes and awards, medical and health care payments, service contracts, etc. These payments must have been made to an individual, a partnership, an estate, or to an LLC. In general, corporations are exempt (at least for payments made during 2010 – the 1099 laws are changing in 2011 & 2012).

If your business paid at least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest; any fishing boat proceeds; and gross proceeds to an attorney are a few other times when your business is required to send a 1099-MISC.

Who Receives a 1099
In general, if you or your business provided $600 or more in goods or services to another company, you should receive a 1099-MISC from your customer. If you do not receive a 1099-MISC, no need to worry. You are still responsible and required to report that income on your tax return.

When to File Your 1099-MISC
Form 1099-MISC must be sent to the recipient(s) of the income (i.e. your subcontractors and vendors) by January 31st. For example, if your business paid $2,000 in rent during 2010, you owe your landlord a 1099-MISC by January 31, 2011.

You are also required to submit a copy of the 1099-MISC’s you generated to the IRS by February 28th. When submitting to the IRS, you need to include Form 1096, where you provide the total number of 1099’s you are submitting and the total amount being reported. If you are filing electronically through the FIRE System (Filing Information Returns Electronically System), the due date is March 31st.

Where to File Your 1099-MISC
Mail a copy of the 1099-misc to anyone you paid $600 or more in the course of your trade or business to the address they provided on the W-9 you collected earlier in the year. The W-9 is a form you send to any vendor requesting their TIN (taxpayer identification number), address, and legal name of their business. It’s a good idea to collect a W-9 from all new vendors and wait to send their first check until you receive the completed W-9. W-9’s are available at IRS.gov.

You are also required to file a copies of all the 1099’s you sent to vendors and subcontractors to the IRS. When filing with the IRS, you will need to include Form 1096. The IRS’ mailing address is included in the Form 1099-MISC Instructions provided by the IRS. Please visit IRS.gov for information about filing electronically using the FIRE System.

Why Do We have to File 1099’s
Since there are millions of sole proprietors and small businesses in the US, 1099’s help the IRS keep track of how much these individuals, subcontractors, and small businesses are actually making. The process helps keep individuals and businesses honest on their income tax filings.

How to Complete a 1099
1099-MISC forms are available for purchase at most office supply stores (i.e. Staples & Office Max). They can also be ordered for free from the IRS. Once you have the forms, you can print the information directly on the form using your accounting software (QuickBooks, Peachtree, etc). If you only have a few 1099’s or you do not use accounting software, you can fill them in by hand.

Important to Note
1099’s are for reporting payments made to your subcontractors and are not for reporting wages paid to your employees. Employees wages and tax withholdings are reported on a W-2.

Resources
Instructions for Form 1099-MISC (2010).

Form 1099-MISC (2010)

Instructions and Form 1096 (2010)

A Guide to Information Returns

Information about the FIRE System (electronic filing)

Form W-9

Who Can Help You File 1099’s
If you get stuck or have questions, contact the IRS, your lawyer, or your CPA.

____________________________________________________________

Michelle Edwards, CPA - QuickBooks Consultant Written by Michelle Edwards, CPA
Certified QuickBooks ProAdvisor

Michelle is the owner of Trailhead Accounting Solutions CPA, LLC, an Erie, CO based CPA firm focused on providing small and mid-sized businesses with day-to-day accounting, bookkeeping, and business solutions. Michelle is a CFO turned consultant who loves working with small businesses and entrepreneurs. When she’s not crunching numbers, she can be found hiking, remote camping, gardening, quilting, and hanging out with her family.


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