I'm also big fan of training people to do as much of their own work in QuickBooks as makes sense for them and their business. The toughest part of my work isn't setting up QuickBooks to do things it doesn't want to, or teaching people to use the sometimes tedious processes, it is helping them to decide how much they should or should not do on their own. I recommend that every QuickBooks file get a review in mid-Jan to reconcile W-2's and 1099's to the Profit and Loss Report in QuickBooks. But for those entrepreneurs who are doing their best this year with the limited resources they have, and who can't afford to hire their "QuickBooks Expert" this year, this article is for you:
You may be ready to do your own 1099's, or to do your clients 1099's,You've heard about the 1099 rule changes and you've figured them out, you've decided to either pay for an online program that lets you print 1099 vendor copies and e-file 1099 IRS copies using Intuit's program that's $39.00 unlimited/integrates with QuickBooks software, or the Sleeter-recommended program that's $39 unlimited/integrates with QuickBooksOnline, Bill.com, and other web-based applications through CSV; or one of the many programs that are about $3.49 per form. 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 the forms. Easy enough, right?
but is the QuickBooks data you're working with ready for you?
But 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 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 1099's reports will come out absolutely correct. The way you (and the IRS) expect them to be.
Before you create 1099's in QuickBooks (PC or Mac):
1. Run the "1099 Summary” report Vendors & Payables > 1099 Summary; save or print it. You'll refer to it in the steps below.
2. Make sure all bank account(s) are reconciled through Dec 31st if they are used to process payments to potential 1099 vendors
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 Make sure there are no outdated, uncleared payments to 1099 vendors.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 Payees’ are now listed 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". If you are using QuickBooks for Mac then take advantage of the "Transaction Center". This simple interface gets right into the dirt, without you needing to create reports from scratch. For example, click "checks" in the Transaction Center and every check in QuickBooks is immediately available on the screen, accessible, and sortable by name, number, etc. If you are using QuickBooks for Windows you will need to create your own Transaction Detail reports instead.
5. Fix Fix Fix - Open the "QuickBooks 1099 Wizard" by going to "Vendors" on the main menu and then "Print 1099's" (on both PC and Mac). Use the first step, "Select Vendors", when you need to change the 1099 eligibility of a vendor, and use the "Map Accounts" when payments to vendors that are set up and as 1099's are not 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. Compare the data to the individual transactions, and when the "1099 Summary" report is accurate, you and your QuickBooks are ready to process 1099's.
Excellent advice, many thanks. The step before creating the 1099 is to constantly remind the owner to get the W9. My rule is that the contractor does not get paid for his first bill until the owner has the 1099 in his hand, properly executed. I encourage the owners to immediately fax or scan the W9 and send to me.
ReplyDeleteFor those who do not actually do the entries in QB, I show them instructions via print outs of print screens, etc. on how they can enter the W9 information themselves.
GREAT RULE, especially for all the entrepreneurs figuring it out for themselves, sometimes the hard way with penalties and fines.
ReplyDeleteMany thanks Shelly. I have just started quickbooks. I think these advice are really helpful for me.
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