vendor expense vs. contractor expense

Hello there, @OGBadger. 

I'm glad to help you with your questions about QuickBooks Online (QBO) and your business setup. 

Regarding your first question, if the person you hired is an independent contractor, classify her as a contractor expense in QBO. If she is a vendor providing goods or services, classify her as a vendor expense. As she is an individual providing a service, classify her as a contractor expense.

For your second question, yes, you are correct that you need to provide a 1099 to anyone you pay $600 or more during 2024. To track this, you can check the box for 1099 tracking in her profile in QBO. This will help you keep track of the payments made to her and ensure that you have the necessary information for issuing a 1099 at the end of the year.

Regarding your third question, you need the contractor's SSN or tax ID for a 1099. QBO doesn't request this info directly. Obtain it from the contractor by asking for or using a W-9 form to ensure accurate tax reporting. Let me know if you have more questions.

I've attached some articles below for additional details, as well as screenshots for additional reference: 
 

• How to Add Independent Contractors and Track Them for 1099s in QuickBooks Online
• 1099 Setup
   

That should point you in the right direction. Please know that I'm just a post away if you have any other questions about setting up contractors or working with QuickBooks. I'll be happy to help you further. Have a great day ahead.  

Thanks Deb

I'm sorry but I am still confused when you say,

"if the person you hired is an independent contractor, classify her as a contractor expense in QBO."

I guess thats my question. What is Quickbooks definition of an "independent contractor"?

Then you say,

"If she is a vendor providing goods or services, classify her as a vendor expense."

Same question here.  What is Quickbooks definition of a vendor?

Then you say,

"As she is an individual providing a service, classify her as a contractor expense."  

to this statement I ask, why is she not a "vendor"? Is a vendor not an individual? Is a vendor like Home Depot or something?

Sorry but I still need clarification

Many Thanks

Hi there, @OGBadger.

I'll add info about the distinction between Vendors and independent Contractors. 

A Vendor is a person or company who sells things for you. Most of the time, products are comparable to one another to a variety of clients. Both large and small enterprises are customers of the vendors that provide goods and services and long-term services are often provided by vendors.

An Independent Contractor is the one you hire to carry out particular responsibilities that have a predetermined deadline. Their employment is temporary, and the agreements governing their engagement may need to be renewed at regular intervals.

Moreover, if you add a contractor it will show to both vendors and contractor's tab. Yet, the vendor lists can be viewed in the vendor's tab.

For future reference, if you want to see how much you're paying each vendor monthly, you can read this article: How to run and save a monthly expense report by the vendor.

Leave a comment below for additional questions about adding a vendor and contractor to your QuickBooks Online (QBO) account. I'll be willing to lend a hand. Have a good day.

@OGBadger 

"I have no idea if she is a sole proprietorship or s corp or whatever."

You need to have her fill out a Form W-9 so that you know. 

"When I go to pay her and record this, is she a vendor expense or a contractor expense in QBO?"

Technically, she is a contractor because you're paying her based on an agreed-upon hourly rate.  In QBO, when you set up a contractor, they are also listed as a vendor.  You're most likely going to issue her a 1099 either way.  

"Also, I imagine I need her ss # or tax ID number to issue a 1099. Is there a way for quickbooks to request documentation from her? Does this depend on whether I classify her as a vendor or a contractor?"

That will be on Form W-9.  Just email it to her directly and then save the completed form under her vendor profile.  

@OGBadger 

You need to pay her as a 1099 contractor. You will need an add-on to proceed.

https://quickbooks.intuit.com/payroll/contractor-payments/#pricing

Another option, you can sign up for a free Melio account to integrate with QBO and pay your 1099 contractors. Your bank will administer Form 1099-K if you pay the contractor by credit card or debit card.

https://affiliates.meliopayments.com/quickbooks

You can also get a cashback to pay the first bill. Make sure to click the Get $100 cashback button to signup.

https://affiliates.meliopayments.com/cashback

@OGBadger 

You don't need any add-ons.  @4Gal 's links are affiliate links (commission earned for promoting a product) which are specifically prohibited on this forum.    

@Rainflurry 

Are you trolling now?

ok thanks

I am getting closer to fully understanding.

One thing...when you say, "A Vendor is a person or company who sells things for you" do you mean TO me? Like Home Depot would sell me a stapler to me or Moo Print sells business cards to me? They would be VENDORS, correct? Vendors would NOT need a 1099 even if I spent over $600 on office supplies for example, correct?

A "contractor" would be someone I specifically engage (like the woman who helped set up my website). She would need a 1099 if I spent over $600.

Thanks in advance for clarifying.

PS is it a known problem that people like me can't post in this community when using the Safari browser? Weirdly only Chrome allows me to do this

Thanks

Your post makes the most sense to me for some reason. Appreciate your reply.

Getting into tax law here, but could you maybe explain why is it that we don't ask VENDORS (like Office Max) for w-9 forms even when we purchase more than $600 of goods (staplers) or services (printing services) but we DO ask for W9's from "contractors" who sell us goods (a png logo) or services (help with a website)?

This is still a bit fuzzy to me.

THX in advance for your reply.

@4Gal 

Not at all.  You told the OP that they needed add-ons.  They do not.  Whenever a QB user says they're new to QB, they are vulnerable to incorrect advice which, IMO, you have given.  I'm trying to protect the OP from being mislead and you making money off of them. 

You're also well aware that this forum prohibits affiliate links but yet you continue to post them.  In case you're not aware, here are the guidelines.

We ask you to limit your links

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thanks!