Collect Documents Needed
Similar to when you have a new hire, we must collect information from vendors for TAX and INSURANCE purposes.
Taxes – What we need from Vendors
For non-incorporated vendors (and some incorporated ones), it is mandatory to send annual tax statements (1099’s) similar to an employee’s W2.
NOTE: If vendor is paid exclusively via debit/credit card or through Paypal, a W9 is not required.
Otherwise: Collect a W9 form from every Vendor. A link to this form is located below.
The W9 is used to determine if a 1099 is required for the vendor. For a complete list of 1099 rules follow the IRS link below and perform a search for the rules you need.
Insurance – What we need from Vendors
A certificate of insurance (COI) is required if the vendor hired is a subcontractor. The minimum insurance requirements are set by the state and/or the insurer. Verification is required annually to ensure the company is covered in the case of workmanship defects, and to ensure the vendor is covered by insurance and not the company’s worker’s comp policy.
Example of standard a COI can be found by clicking the link below.
Create Vendor in Quickbooks
Once required documents are collected you can create the vendor in QuickBooks.
From the Quickbooks dashboard Click the EXPENSES link on the left-side menu. You will have two options: EXPENSES or VENDORS. Select VENDORS.
Click on the NEW VENDOR button located at the top right hand side of the screen. See Image below
Your screen should now look like the image below. Record data provided by the Vendor W9 form. At a minimum input the NAME, ADDRESS, and TAX ID/Social Security Number.
Enter the payment Terms such as NET 10 this will be used to determine when payments are made. See image below.
Vendor Name and the Person being paid may not be the same. Use the DISPLAY NAME to select how the name appears on the payment check. See image below. Check the box that says “use display name”.
If the Vendor is identified with an Account Number. Normally used when contacting them or for printing checks. Input the Account number in the Account No field. See image below.
Opening Balance will ALWAYS be 0 (Zero). See image below.
Select the check box “Track payments for 1099” only if the Vendor requires a 1099. See image below.
Attach the W9 and the COI using the attachment option. See image below
Click on the Green SAVE button located at the bottom right corner
Create a Contractor in Quickbooks
From the Quickbooks dashboard Click the WORKERS link on the left-side menu. You will have three options: EMPLOYEES, CONTRACTORS and Workers Comp. Select CONTRACTORS. See image below.
Now Click on the Add a Contractor Green button located on the right side of the screen. See image below.
Enter the contractor Name and Email Address. See image below.
Do Not send the link to the contractor – UNCHECK the box. See image below.
Now Click the Green button that says “Add Contractor” to finish with this part.
You should now see a screen similar to the one below. Next to Personal Details click the BLUE link “Add” that will open an option for you to designate if the Contractor is a Business or Individual. See image below.
Your screen should look like image below. Enter the Contractors information. The Display name will appear on checks to this contractor.
Hit the Save link located at the bottom right of the screen to move on.
Because you are not able to directly attach a W9 to the Contractor’s account the way you could with a Vendor, you will add the document by going to Settings, the gear icon located on the top menu- right side of the screen. Then select the Attachments option. See image below.