Tips and Tricks to Help You Better Use QuickBooks. | Hawkins Ash CPAs
In this Edition
December 2020

A New Form for 2020: 1099-NEC

Setting Up Vendors for 1099 Reporting in QuickBooks Desktop

Year-End Reconciling: W-2, W-3, and 941 Returns

What Is the Health of Your QuickBooks File?
A New Form for 2020: 1099-NEC
Beginning with the tax year 2020, a 1099-NEC must be used to report nonemployee compensation. Prior to 2020, this information had been reported in box 7 on a 1099-Misc.

Payments should be reported as nonemployee compensation if:
  1. Payments were at least $600 in the year
  2. Payment was made to someone who is not your employee
  3. Payment was for services provided during the course of your trade or business
  4. Payment was made to an individual, partnership, or estate

Some examples of vendors who may receive a 1099-NEC would be snow removal, lawn care, repair and maintenance, and professional services such as attorneys and accountants.

1099-NEC’s need to be provided to the payee and filed with the Internal Revenue Service (IRS) by January 31 or, if this lands on a weekend, the following Monday. 

If you have questions or need assistance with filing your 1099s, please contact us.

Author: Becky Doyle, Advanced Certified QuickBooks ProAdvisor
Direct: 920.337.4524
Setting Up Vendors for 1099 Reporting in QuickBooks Desktop
New for 2020: The IRS has separated nonemployee compensation onto a new form called the 1099-NEC. 

If you need to file both the 1099-NEC and the 1099-MISC for the same vendor, you will need to create a new general ledger expense account for the vendors that will be reported on the 1099-NEC. A single account can only be used for each form. Once you have set up your new general ledger expense account in your QuickBooks file, you can edit the vendor payments to move them from one general ledger account to another.

Steps to Set Up 1099s in QuickBooks

Turn on the 1099 feature:
  • Open QuickBooks Desktop, go to Edit tab and select Preferences
  • Select Tax:1099
  • Choose Company Preferences tab
  • Click Yes to filing 1099-MISC forms option
  • Select Ok to save the settings.

Make sure your vendors are set up properly:
  • Find your 1099 eligible vendors in the Vendor Center and double click them to edit. Verify the names and addresses are correct. Click on the Tax Settings tab and verify the tax ID is correct and check the box that they are eligible for 1099s.
  • All eligible 1099 vendors should complete IRS Form W-9 (Request for Taxpayer ID) when engaged for services. If you do not have a vendor ID number, have them complete this form as soon as possible. If the vendor refuses to provide their ID number, you should deduct backup withholding from the payments you make to them.

Set up your expense accounts in QuickBooks:
  • Click Vendors on the top menu bar
  • Select Print/E-file 1099s
  • Click 1099 Wizard
  • Review the vendor names and check the box to create the form, click Continue
  • Verify the vendor information, click Continue
  • Click on the drop-down menu on the right from Show 1099 accounts to Show all accounts
  • Select the correct 1099 box to apply the expenses, click Continue
  • Review the payments selected, click Continue
  • Click Summary Report or Detail Report at the Confirm your 1099 entries window, click Continue (or click on Reports, Vendors & Payables, 1099 Summary)
  • If you are satisfied with the 1099s, you can Print 1099s (you must have pre-printed forms) or Go to 1099 E-File Service (additional fees apply)

Please contact us if you have any questions or would like Hawkins Ash CPAs to prepare your 2020 Form 1099s for you.

Author: Julie Schowalter
Direct: 262.243.9610
Year-End Reconciling: W-2, W-3 and 941 Returns
With all the payroll changes in 2020, do not forget to reconcile Form W-3 to your quarterly Forms 941. 

To reduce discrepancies between amounts on Forms W-2, W-3, and Forms 941, you should make sure the amounts on Form W-3 total amounts from Forms W-2. You should also reconcile Form W-3 with your four quarterly 941 returns by comparing the following amounts:
Make sure you retain your reconciliation information in case you receive inquiries from the Internal Revenue Service (IRS) or Social Security Administration (SSA).

These agencies reconcile your W-2s against your 941s, and if:
  • W-2s are less than Form 941 – SSA will send you a notice
  • W-2s are more than Form 941 – IRS will send you a notice

There are many ways to reconcile these amounts. Whether it’s an excel spreadsheet, a calculator tape, or a handwritten computation, verify your numbers before you submit anything to the IRS or SSA. Please contact Hawkins Ash CPAs with questions. 

Author: Jamie Lambrecht, Certified QuickBooks Desktop ProAdvisor
Direct: 920.684.2556
What Is the Health of Your QuickBooks File?
There are several symptoms that can cause QuickBooks performance or corruption issues such as:
  1. File Size: When your file size gets to around 1GB for Pro, 1.5GB for Premier and 2GB for Enterprise
  2. List totals: Your items are over 14,000 
  3. Age of the file: Your file is 5 to 10 years old

While there is no exact science to performance issues, it is good practice to do a checkup on your file and find a remedy.

To diagnose your company file, select F2 on your keyboard. This will bring up the Product Information Window which lists the file size and list information.

A few things that you can do to remedy performance issues:
  • Create a portable file; restore and use the restored version
  • Condense the company data – verify and rebuild your company file prior to condensing and make sure you have a good backup
  • Create a new data file
  • Upgrade to QuickBooks Enterprise (if using Pro or Premier)

Please feel free to contact one of our Certified QuickBooks ProAdvisors to discuss the various options for your file.

Author: Debbie Denny, Advanced Certified QuickBooks ProAdvisor
Direct: 920.337.4558
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