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cwh2024
January 31, 2024
Question

1099 NEC and Contractor Payments

  • January 31, 2024
  • 1 reply
  • 0 views

I am a (new) small business owner with 3 independent contractors working for me. I am working on their 1099 NEC and have run into a problem. Throughout the year, occasionally the contractors would buy supplies from me and instead of paying me, I would just deduct it from what I owed them for that pay period. Of course now my pay statements to them do not reflect their gross payment but instead it shows their net payment. What can I do? How can I add back their expenses? Quickbooks rep today said I could create Bill Pay for each contractor expense and essentially "pay" them back for their expenses so that total paid to them represents the gross. This seems kind of backward to me and after trying it, the bill pay does not show up in the 1099 total. Please help!

1 reply

R
ReymondO
January 31, 2024

Good day, @cwh2024.

 

I'd be glad to help you properly track your contractor payments in QuickBooks Online.

 

If you want to track the expenses you've made to them, I'd suggest deleting the transactions you've made to correct your records. Then, recreate them again in QuickBooks. 

 

For the payments they've made to you, you can record them by creating an invoice and receiving the payment or sales receipts. To track the expenses you've made to your contractors, you can either create a bill and record the payment, or enter them as an expense or check. 

 

To ensure that the payments reflect on your 1099s, here are the things you should remember:

 

  • Make sure your contractor is active and set up for 1099 tracking.
  • They meet the threshold to get a 1099.
  • The type of payments you've used aren't excluded from the 1099-MISC and 1099-NEC forms. Payments to 1099 vendors made via credit card, debit card, or third-party system, such as PayPal, are excluded from the 1099-MISC and 1099-NEC calculations. This is because the financial institution reports these payments, so you don't have to.
  • Ensure you're paying contractors from the right expense account.

 

For additional reference, check out these articles:

 

 

Once everything looks good, you can start creating and filing 1099s in QuickBooks Online.

 

That should help you correct the amount and get the contractor added to the 1099 lists. Get back to me if you have follow-up questions about this. I'm always around here in the Community to help you. Have a good one!

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