Yes, we can change an employee to a contractor, wvedwards3.
We'll have to setup the employee as how we record a contractor. For the employee's payroll, let's make sure that we delete all paychecks to clear out any transactions that will cause expense duplicates it will not record a W-2. We'll inactivate the employee once we've done setting it all up.
Here's how to enter a vendor:
We'll have to open each employees paycheck to delete them. Just go to the Employees menu and click on the employee to view all the Transactions. Double-click on each paycheck and click the Delete X button at the menu.
I'll show you how to inactivate the employee once we're done with the steps above:
You can now pay your contractors and track their 1099s.
Reach out to me if you need anything else. Thanks!
Employees receive W2. Contractors receive 1099. An individual can be both but you need their name twice and duplicate names are not allowed. The simplest way around this is to spend a period at the end of one of the instances of the name.
The steps outlined by @Catherine_B are a little out of order due to the duplicate name restriction. Set up the new name first. Then you can delete the employee history IF that is appropriate.
Thank you! This is very helpful.
To be clear, I have issued checks Jan-Apr 2020 for this person as an employee. She wants (per her accountant) to receive a 1099 for the monthly cleaning services she has provided...since she left our office 10 years ago when she was our full time secretary.
So, following the directions given, will not interrupt her payments on March 31 or April 30, that I’ve already processed and want her to receive, right? I would like her payments from May 2020 on to be as a vendor. Therefore, should I follow these instructions now or do I need to wait until May (or any time after the April 30th payment is in her direct deposit account?
I'd be glad to share some insights and help you get this straightened out.
To answer your questions, yes your right, following the steps will not interrupt the employee's payments. You can process her payment as a vendor on May for accurate posting.
The bottom line is if the employee, performs work that would be paid with 1099 if done by a vendor, you will be paid with a W-2 for your regular work and 1099 for your freelance work.
To know more about 1099, check these out:
You can always get back to me if you have any other questions. Have a good one.
Thanks for posting here, Vcp090220.
I know how to categorize yourself as a contractor and receive 1099. Let me show you.
If your name is still listed as an employee, we need to delete it so we can set you up as a contractor. Before that, make sure you have a copy of all your paychecks as a reference when you reenter them for your 1099. Here's the easiest way to print the transactions list:
Once done, open each paycheck and tap Delete. Then, delete your employee profile by following these steps:
We can now set yourself as a contractor. Please check these articles for the detailed steps:
Let me know if you need further assistance by leaving a comment again. I'll be here!
I have someone who has been setup as an employee (W2) for the last couple of years. They have contacted us because they should have been considered a contractor. Is it possible to go back and change their W2s from the prior years? How do I handle that?
Glad to see you in the Community, @kwillis20. Yes, you can change the record in QuickBooks Desktop. I'd be happy to help you with how to change your contractor's setup from W2 to 1099.
Let's get the copies of your contractor's paychecks made during the time of their service in the Employee Center and select the Transaction List. This is done since you've added them as your employee, not as a contractor. Then, delete their employee's profile and create a contractor with their details.
You can invite your contractor and let them enter their info in the W-9 form. Then, follow Steps 1-3 to track their 1099 in this article: How to set up contractors and track them for 1099s in QuickBooks. In this set of steps, you can enter the payments you've sent to your contractor by referring to the copy of the Transaction list.
I'd also recommend speaking with your tax advisor or accountant to ensure that you have entered the correct information and assist further with entering the payments. If you don't have one, don't sweat, you can look for an accountant that's near your location here: Intuit Pro-Advisors.
I've included these references to help you with the next processes with your accountant:
You can always get back in this thread if you have additional questions about the process. I'm here to lend a helping hand anytime. Take care!
Jumping in to help you change the employee setup, kwillis20.
The steps for the QuickBooks Desktop are different compared to QuickBooks Online. I'll share with you the steps for the version that you're using.
First, make the employee inactive. Here's how:
Second, proceed to the Contractors tab and set up the person as a contractor. Here's an article for more details: Add, Edit and Inactivate Contractors.
Since the employee or contractor was part of your payroll filings from the previous years, you might need to submit amended tax forms. For now, filing an amended tax form is not supported in QuickBooks Online. You can download the Form 941-X and instructions from the IRS and your state agency's website.
Lastly, I'd suggest reaching out to our Payroll Support Team. They can help you adjust the payroll amounts in your records from the previous years. Here's an article to get their contact details: Contact Payroll Support.
Don't hesitate to reach out to us again if you need anything else.