As businesses grow and expand, they often rely on the expertise of contractors to complete specific projects and tasks. Managing these contractors efficiently is crucial for maintaining smooth operations and accurate financial records. QuickBooks provides allows you to set up and manage contractors within the system.
In this article, we will explain the various tasks involved in setting up and managing contractors in QuickBooks Online.
Accessing the Contractors Section in QuickBooks Online
To get started, navigate to the Contractors section. This can be found in the Expenses tab on the left-hand side of the dashboard. Click on Contractors to enter the contractor management area.
Adding a New Contractor
In the Contractors section, click on the Add a Contractor button to add a new contractor to your list. You will be prompted to enter the contractor’s name and email in the fields provided. Once done, select Add contractor. QuickBooks will then send your contractor an email where they can securely complete their profile and submit a signed W-9 online anytime.
Enter the contractor’s name and email
The Prepare 1099s button in the contractor screen facilitates the process of generating 1099-MISC forms for independent contractors. A 1099-MISC form is a tax document used to report payments made to non-employees, such as contractors, freelancers, and vendors, who have received $600 or more in compensation during the tax year.
Review your company info to set up 1099
QuickBooks lets you pay your contractors directly from within QuickBooks Online. When you click on the Pay Contractors button, QuickBooks Online provides options for recording various payment methods, such as checks, electronic transfers, or cash. You can select the appropriate payment method and input the payment details, including the amount, date, and the contractor’s name or vendor information.
Paying contractors in QuickBooks Online
Categorizing Billable Expenses
If your contractor incurs billable expenses on behalf of your business, ensure you properly categorize these expenses in QuickBooks Online. Click on the + New button and select Expense. Choose the contractor’s name from the “Payee” drop-down list and enter the necessary details.
Reimbursing Contractors for Expenses
If your contractor submits expenses for reimbursement, go to the Expenses tab and click on “Expenses” again from the drop-down menu. Choose the “Vendor” filter and select the contractor’s name. Review the expenses, check the boxes for the expenses to reimburse, and click on Save and Close.
Running Reports for Contractor Payments and Expenses
QuickBooks Online offers a range of reports that can provide valuable insights into your contractor payments and expenses. To access these reports, go to the Reports tab on the left-hand side of the dashboard. From here, you will find various reports, such as “Expenses by Vendor Summary” and “1099 Contractor Summary,” which can help you track contractor-related financial data.
Sample 1099 Contractor Balance Summary in QuickBooks
Reviewing and Managing Contractor Records Regularly
As your business continues to work with contractors, it is essential to regularly review and manage their records in QuickBooks Online. Ensure that all payments and expenses are accurately recorded, and take advantage of the various reports to gain a comprehensive understanding of your contractor-related financial activities.
For more information about setting up contractors in QuickBooks Online, watch the video below.
Setting up contractors in QuickBooks Online is a fundamental aspect of efficient financial management for growing businesses. With QuickBooks Online, businesses can seamlessly add, manage, and track their contractors’ payments and expenses, helping them grow and build strong relationships with their valued contractors.