QuickBooks is an essential tool for managing the finances of your small business. However, it can be a bit tricky to navigate when it comes to adding subcontractors. In this article, we’ll walk you through the process of adding a subcontractor in QuickBooks.
Step 1: Set up Subcontractor as a Vendor
To add a subcontractor in QuickBooks, you need to set them up as a vendor in your system. To do this, go to the Vendors menu and select Vendor Center. In the Vendor Center, click the New Vendor button and fill out the necessary information, including the subcontractor’s name, contact information, and tax ID number.
Step 2: Set up a 1099 Account
It’s important to set up a 1099 account to keep track of the payments you make to subcontractors. To set up this account, go to the Lists menu, select Chart of Accounts, and click New Account. Choose the category of “Other Current Liability” and name the account “1099 Payments.”
Step 3: Check Vendor Eligibility
Before you can pay a subcontractor, you need to ensure that they are eligible for 1099 payments. To do this, go to the Vendors menu, select Vendor Center, and select the subcontractor you want to check. Click the Tax Settings tab and select “Track payments for 1099.”
Step 4: Enter Payment Information
Once you’ve confirmed that the subcontractor is eligible for 1099 payments, you can enter their payment information into QuickBooks. To do this, go to the Vendors menu and select Enter Bills. Fill out the necessary information, including the subcontractor’s name, payment amount, and date. Make sure to select the 1099 account you set up in Step 2.
Step 5: Print 1099 Forms
At the end of the year, you’ll need to print 1099 forms for your subcontractors. To do this, go to the Vendors menu and select Print/E-file 1099s. Follow the prompts to complete the process.
In conclusion, adding a subcontractor in QuickBooks can be a bit of a process but is vital for keeping track of payments and complying with tax laws. By following the steps outlined above, you can add a subcontractor to QuickBooks and ensure that you’re keeping accurate records of all payments made.