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Level 1

Can I run reports that differentiate between the types of accounts in a payment to a 1099 contractor when computing Workers Comp cost? Confused!

I run a 1099 summary report monthly to see what subcontractors I need to pay Workers Comp Ins on. The issue that I am having is that often, I reimburse my 1099 contractor for material cost (Home Depot receipts, etc) so in essence he is being paid Time and Materials. 

At first, I would write "Tommys Painting" one check for the total of the labor that he charges me and for the receipt(s) from Home Depot.  This of course was going to cause me to pay W/C on the material cost (not necessary and expensive). So I created a duplicate vendor account named "Tommys Painting - Materials" with the vendor type as Materials and 1099 eligible unchecked. ("Tommys Painting" is vendor type 1099 contractor and 1099 eligible checked)

Now I write seperate checks for materials and one for labor. I apply the check that reimburses the materials to vendor "Tommys Painting  - Materials" and the labor payment to vendor "Tommys Painting". This allows me to run a 1099 summary report at the end of the month so that I can quickly find the monthly total of labor payments to "Tommys Painting" thus I pay WC on that amount.

Question is: Is there another way to do this? I am supposed to report ALL payments on 1099 misc so running a 1099 summary at the end of the fiscal year excludes the material payment portion. I assume that I can check the 1099 eligible box on the "Tommys Painting - Materials" and either send him a separate 1099 or include it in the "Tommys Painting" 1099 misc. 

What other way can I report the material and labor cost on a 1099 misc and still be able to run a monthly report for just the labor?

Thank you very much.

Solved
Best answer 12-10-2018

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Level 15

Can I run reports that differentiate between the types of accounts in a payment to a 1099 contractor when computing Workers Comp cost? Confused!

"So I created a duplicate vendor account named "Tommys Painting - Materials"

That was an Error.

For the Payee, that is just Tom.

You are asking about Splits, on the items and/or expenses accounts.

You write the check and list the Splits, posting to materials and to labor. You map Both of these accounts for purposes of box 7.

But now you can run a report filtered on only the Labor account, not all payments to the vendors. Example: 1099 Summary, filter on account = Subcontractor Labor only.

You need One Name, and can use as many accounts as matter. They might even be improving your own building = your Asset, plus job Expense plus Job Labor expense. That part has nothing to do with making More Names for them.


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Highlighted
Level 15

Can I run reports that differentiate between the types of accounts in a payment to a 1099 contractor when computing Workers Comp cost? Confused!

"So I created a duplicate vendor account named "Tommys Painting - Materials"

That was an Error.

For the Payee, that is just Tom.

You are asking about Splits, on the items and/or expenses accounts.

You write the check and list the Splits, posting to materials and to labor. You map Both of these accounts for purposes of box 7.

But now you can run a report filtered on only the Labor account, not all payments to the vendors. Example: 1099 Summary, filter on account = Subcontractor Labor only.

You need One Name, and can use as many accounts as matter. They might even be improving your own building = your Asset, plus job Expense plus Job Labor expense. That part has nothing to do with making More Names for them.


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Level 1

Can I run reports that differentiate between the types of accounts in a payment to a 1099 contractor when computing Workers Comp cost? Confused!

Thank you. I understand splitting now using the expense accounts and have adjusted my vendor Tom to show the splits in the expense accounts. The reports are working correctly and I have deleted Toms Materials.

How would one use the items accounts in this regard?
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Level 15

Can I run reports that differentiate between the types of accounts in a payment to a 1099 contractor when computing Workers Comp cost? Confused!

 The issue that I am having is that often, I reimburse my 1099 contractor for material cost (Home Depot).

No you do not do that legally.  The contractor is in business, he has expenses, then he bills you for his work and what ever else, you pay the bill - that is his income.  Only employee's get reimbursed.  And keep in mind a 1099 audit will want to see his bills (as well as any other audit too).

The full amount you pay the contractor is his income and is 1099 reportable if paid by cash or check.

I solved the issue by paying my contractors with a CC or paypal.

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Level 1

Can I run reports that differentiate between the types of accounts in a payment to a 1099 contractor when computing Workers Comp cost? Confused!

Thanks for the reply. I appreciate it. "Reimburse" I've edited it to say he is billing me Time and Materials.

My WC carrier here in LA allows me to deduct the documented cost for materials paid to an uninsured sub so how do I run a report for a vendor and differentiate between the time and the material?

Also, how does paying with PayPal or cc solve your issue?
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Community Champion

Can I run reports that differentiate between the types of accounts in a payment to a 1099 contractor when computing Workers Comp cost? Confused!

You don't differentiate. What you do is demand an insurance certificate from the 1099 vendor so that noNE of what you pay him is subject to workers comp. Otherwise it all is, time and materials . For wc there is no difference.

Unless you code materials separately and not subject to 1099. Every expense to you item can be either blanket 1099 or not and every 1099 vendor has edit fields on which items to include or not as 1099.
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Level 1

Can I run reports that differentiate between the types of accounts in a payment to a 1099 contractor when computing Workers Comp cost? Confused!

Hi John, thanks for the response. I appreciate it. My WC carrier here in LA allows me to deduct cost for materials paid to an uninsured sub (GL does not). As you probably know, for insurance purposes an uninsured sub is classified as an employee. For tax purposes, he is not thus the need for a 1099 misc and the need for a report or accounting method that can be used for WC audits.
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Community Champion

Can I run reports that differentiate between the types of accounts in a payment to a 1099 contractor when computing Workers Comp cost? Confused!

Then what you do is post two different items, each 1099 eligible for the subs. Your 1099 total will be correct but then for wc you run an expenses by vendor detail, customize form as needed to show non labor and labor on 2 reports, total of which should equal the 1099 total for that sub.
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Level 15

Can I run reports that differentiate between the types of accounts in a payment to a 1099 contractor when computing Workers Comp cost? Confused!

Frank
<<<<Also, how does paying with PayPal or cc solve your issue?>>>>

You only have to report cash and checks, so if you do not use them to pay a contractor you have zero 1099 reporting to do.  Credit cards, paypal, google  pay, etc are payment types you do not report, those companies have their own reporting criteria, and issue a 1099-K when necessary to the contractor
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Level 15

Can I run reports that differentiate between the types of accounts in a payment to a 1099 contractor when computing Workers Comp cost? Confused!

"and I have deleted Toms Materials."

You could have Merged the names, into just the one.

"How would one use the items accounts in this regard?"

Let's state that Tom does Framing, Painting, and Drywall. You want to track and separately see that as the 3 type of labor, and the materials fall into each of those 3, as well. You still only need One Expense account for Subcontractor Labor and One Expense account for Job Materials.

Items allow you to use Quantity, to see cost and price, to use estimates and purchase orders, to use Progress invoicing.

I recommend you open Help and search on "Work With Items". They allow you to control the flow of the data to income, expense, or Both accounts, such as: You incur subs labor expense and charge that to clients = the one item is both an Expense and an Income event for you. This is called Two Sided Items.

Job reporting relies on the use of items. Have you ever run your job reports?

Please see my attachments.


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Level 1

Can I run reports that differentiate between the types of accounts in a payment to a 1099 contractor when computing Workers Comp cost? Confused!

Thank you for that response. Yes, I do estimates and progressive invoicing so in that regard I understand items. I've never used Two Sided Items. I typically bill out at invoice a previously agreed upon (contracted) price and I usually know what my sub cost (overhead) will be within a few points of my estimated sub costs. Interesting. Thanks for sharing.

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