SOLVED•by QuickBooks•4014•Updated October 02, 2023
Learn how to add contractors and track payments you make to them.
In QuickBooks and QuickBooks Contractor Payments, you can set up your contractors as vendors. QuickBooks and QuickBooks Contractor Payments track all their related payments, so when you need to file their 1099s, you already have all their info. Here's how to set up contractors for each product.
Any non-employee who you might pay $600 or more in a given year (although electronic payments, such as with a credit card, don't count). Before you start, check the IRS guidelines so you know who you need to file 1099s for.
Note: 1099 E-File Service only supports contractors with addresses in the United States.
Get your contractors to fill out a W-9
Before you start, we recommend having your contractors fill out a W-9. This gets info you need to make the set up quicker. You can download W-9 forms directly from the IRS.
Set up contractors
Choose your payroll service to set up your 1099 contractors.
To watch more how-to videos, visit our video section.
Go to Expenses, then select Contractors (Take me there).
Select Add a contractor
Enter your contractor’s info, or select the Email this contractor checkbox so they can fill it out.
When you're done, select Add contractor.
If you opted in for the email, wait for the contractor to fill out their info.
If you didn’t choose to send an email:
Select Add next to Personal details or Bank account and enter the contractor info.
When finished, select Save.
All vendors added through payroll are automatically eligible for 1099s.
QuickBooks will start tracking all of their payments behind the scenes. When you're ready to file your 1099s, you can easily add the tracked payments to the form.
To start tracking contractors for 1099 payments, enable the feature:
Step 1: Turn on the 1099-MISC feature
Select the Edit menu and then Preferences.
Select the Tax: 1099 menu. Then select the Company Preferences tab.
Select Yes in the Do you file 1099-MISC forms? section.
When you're done, select OK to save your settings.
Step 2: Add a contractor as a vendor
Select the Vendors menu and then Vendor Center.
Select the New Vendor dropdown and then New Vendor.
Fill out the fields on each tab. You can get this info from a W-9. You can also edit and change this info later.
When you're done, select OK.
Step 3: Track contractor payments for 1099s
Once the feature to start tracking payments for 1099, follow the steps to set up each vendor.
Select the Vendors menu and then Vendor Center.
Select a vendor's name and then select Edit✎.
Select the Address Info tab and review the info:
Make sure you have the correct two-letter state abbreviation and ZIP code.
If the vendor is a person, the vendor's legal name should appear in the First Name, M.I., and Last Name fields.
If you have the company name but not the person's name, leave the Company Name field blank. This prevents them from showing up twice when you prepare your 1099-MISCs.
Select the Tax Settings tab.
Select and check the Vendor eligible for 1099.
Enter the vendor's tax identification number in the Vendor Tax ID field.
When you're done, select OK.
QuickBooks will start tracking all of their payments behind the scenes. When you're ready to file your 1099s, you can easily add the tracked payments to the form.
To start tracking contractors for 1099 payments, enable the feature:
Step 1: Turn on the 1099-MISC feature
From the QuickBooks menu, select Settings.
Select the 1099s section.
Select and check the 1099-MISC forms are filed box.
Select the accounts for each 1099 category that applies to your business for reporting and taxation purposes:
From the Account column, and select an account from the dropdown list.
To associate more than one account: From the drop-down list, choose Selected Accounts then click the desired accounts in the Select Accounts window. Select OK when all appropriate accounts have been selected. Note: Your business may not need to report on all 1099 categories. Many businesses report amounts only for Box 7: Nonemployee Compensation. For more information on reporting requirements, please consult an accounting professional or the IRS.
To change a threshold amount, enter the new amount in the Threshold column. This is optional.
Step 2: Track contractor payments for 1099s
From the Lists menu, choose Vendors.
In the Vendor List window, select a vendor then select Edit Vendor ✎.
Select the Address Info tab.
Make sure the Address field contains the correct two-letter state abbreviation and ZIP code.
If the vendor is a person, the vendor's legal name should appear in the First Name, M.I., and Last Name fields.
If you know the company name but not the person's name, leave the Company Name field blank to avoid double names on the 1099-MISC form.
Select the Additional Info tab.
Select the Vendor eligible for 1099 checkbox and in the Tax ID field, enter the vendor's tax identification number.
