1099 Vendor

I'll help you record the prepayments for your 1099 vendor, @JanetMM.

You've got two options on how to record vendor prepayments in QuickBooks Desktop (QBDT). First, you can write a check and record it to your Accounts Payable (A/P) account. This will decrease the balance until you're ready to create the final bill.

To create a check:

1. Go to the Banking menu, and then choose Write Checks.
2. Enter the vendor name, date, and payment amount.
3. Go to the Expenses tab. In the Account column, enter Accounts Payable.
4. Select the vendor name from the drop-down in the Customer: Job column.
5. Click Save & Close.
   

After that, you can now enter a bill as you usually do. Please make sure to select your 1099 vendor. When you're ready, it's time to apply the prepayment to a bill.

Here's how:

1. Go to the Vendors menu, and then select Pay Bills.
2. Choose the bill you want to associate with the prepayment.
3. Select Set Credits, and make sure to check the prepayment amount.
4. Enter 75% of the amount you want to use.
5. Click Done and then Pay Bills.
   
6. Then, you can pay the remaining 25% bill amount for their taxes.

Second, you can use the asset account to track the prepayments. Please refer to Option 2 in this link for more details: Record vendor prepayments in QBDT.

To review your vendor's prepayments, you can run the Vendor Balance Detail report under the Vendors & Payables section. Then, customize it to get the information you need. 

Also, you'll want to memorize the said report to save a copy on hand.

Count me in if you need more tips about handling your vendors in QuickBooks. I'm here to extend a helping hand anytime.

Thank you.  I'll give this a try.  It sounds kind of confusing but hopefully as I go to do this, it'll make more sense.

John,

If my boss wants us to pay the taxing authorities directly (I believe that is what he is leaning toward).  How would I record it then and still have the full 100% show as payments to the employee as that is what they'd be taxed on?

Thanks,

Jan

You're welcome, Jan!

I can share more tips on how to handle your vendor prepayments.

You can pay the remaining 25% bill amount using the same steps above. Just indicate in the Memo field that it's intended for the vendor's taxes.

This task can be tricky. Thus, I suggest consulting your accountant for further guidance. If you don't have one, we can help you find an expert through our Find-an-Accountant tool.

To keep track of your vendor's prepayments, you can pull up the Vendor Balance Detail report. Then, customize it to get the information you need. Just go to the Reports menu, and then select it from the Vendors & Payables section.

Fill me in if you have more questions regarding vendor prepayments. I'd be glad to help you always. Have a great day!