W2s and 1099s - End of Year

Hello. Welcome to QuickBooks Gal. My name is Jayne Miller, Certified QuickBooks ProAdvisor, Enterprise Solutions Provider, Sleeter Certified QuickBooks Advisor, Peachtree AccountCare Partner and Microsoft Partner.

I'm the owner of Custom Business Solutions, a firm specializing in QuickBooks, Peachtree and Microsoft Small Business Accounting software support. If you've got a QuickBooks Mess, call us for training and support. We offer bookkeeping, payroll and QuickBooks classes. Send your questions and comments to info@quickbooksgal.com or call me at 775-348-9225.

Today I’ll discuss getting ready to process W-2’s and 1099’s.

As a business owner with employees or subcontractors you will be required to issue W-2's to employees and 1099M's to non incorporated, non-employee service providers. Subcontractors and service providers who are not incorporated must provide a form W-9 to you. You'll use this information to issue a 1099 to them if they were paid $600 or more in the tax year. You can download form W-9 at IRS.GOV. I generally mail this form to all subcontractors with their first payment. If you haven't done this yet, then it would be a good idea to mail or fax these out now so you will be prepared to process forms next month.

Form W-2 for Nevada employers is a 4 part document. You will issue 2 copies to the employee, keep one file copy with your payroll records and submit one copy along with transmittal form #W-3 to the Social Security Administration. Form 1099 in Nevada is a 3-part document. One copy remains with your payroll or vendor records, one is mailed to recipient, and one copy along with a transmittal form #1096 is mailed to the IRS. Employee and vendor copies must be distributed or postmarked no later than 1.31.07 and federal transmittals are due no later than 2.28.07.

With that in mind, there are some things you can do now to assure easy processing next month. Here's a check list of "to do's" that I follow in my own bookkeeping and payroll practice:

Purchase or order forms in advance. Don’t wait until 1.15.07 to purchase your supplies. Plan now, buy now. Your local office supply store will have IRS compliant forms in stock after December 1st or you can order forms from my website and other online services. Office supply stores will not, however, offer W-3 transmittals or 1096 transmittals separate from kits or bundles. When you purchase a package of 50 w-'s or 1099's, the manufacturer includes 1 or 2 transmittals. I like to order extra transmittals directly from the IRS at 800-829-FORMS; they're free. By the way, you can order any tax related form from the IRS, but remember, they are not computer friendly! Pay for the forms; order the transmittals only from the IRS. Note: If you need 1099 Interest forms or any other 1099 form except 1099 M, you'll need to order from my website, another online service or the IRS. Office supply stores do not carry any 1099 forms except Miscellaneous. Again, the IRS forms, while free, are not computer friendly.
If you are using Peachtree version 2007, please be aware that the forms you need to purchase have changed – only if you use version 2007. With the new Print-N-Sign capabilities in version 2007, the federal, state and employer copies of the W-2 and the W-3 can be printed and submitted on stock blank paper. Employees copies of Form W-2 (Copies B, C, and 2) have to be printed on IRS approved perforated paper, with individual filing instructions pre-printed on the back. The paper is perforated vertically and horizontally, printing 4 copies of an employee’s W2 on one sheet, making this the only form that needs to be purchased. If you use Peachtree Version 2005 or 2006, you will continue to order the same preprinted W2 and W3 forms as prior years.
Confirm employee/vendor addresses, social security numbers (or in the case of vendors – Tax Payer ID). I have created a ½ page form for employees that I ask them to complete every December and if I don’t have one on file, I request a W-9 for vendors and subs that may be eligible for 1099’s.
Compare the information on the end of year employee information forms with the information in your payroll file and make any necessary corrections.
Compare the information in your vendor file with the information on the submitted W-9 forms. In QuickBooks and Peachtree, you must indicate in the vendor profile that the vendor is a 1099 vendor and enter his/her taxpayer id #. If you don’t enable this option, you will not be able to print a 1099 vendor report or 1099 for vendors.
This next step is very important for QuickBooks users. When you print 1099’s in QuickBooks, you will have to set the preferences. In QuickBooks there are 3 important questions you must address:

Is vendor set up as a 1099 vendor?
Did this vendor earn $600 or more in the tax year?
What expense categories do you wish to make eligible for 1099’s? QuickBooks selects 1099 eligible vendors by the first two, and then prints forms only if you have indicated expense categories to be considered in Box 7 on the 1099 form.

The first question is addressed when you properly set up the vendor profile
The second question is answered by virtue of the payments made to the vendor in the tax year…QuickBooks only picks up those who meet or exceed the $600 minimum.
The third question will be addressed when you set up preferences prior to printing 1099’s. It is a good idea to create a spreadsheet of 1099 vendors with their names and the expense categories you used throughout the year now so you will have that information handy when you run 1099’s in January. A good example of this need would be if you have several subs or service providers who are categorized to various expenses. For example: A home builder may categorize his subs according to their services in order to have a Profit & Loss that reflects how much he paid for Electrical subs, Framing subs, Installers, and so on. Additionally, he may have a computer consultant or software trainer who is eligible for a 1099. In QuickBooks, you will have to select all expense categories used for these vendors in order to print 1099’s and assure that you have picked up all vendor disbursements. If you have specific questions about this, please send me an email at info@quickbooksgal.com and I will be happy to go into more detail.
Print a trial run. It is a good idea to print a trial run of W-2’s and compare the totals to your payroll records. QuickBooks and Peachtree will alert you if you have incomplete information before allowing you to print forms, so this is a great way to double check and to preview forms onscreen.
I’m Jayne Miller. Join me next time to learn about the new features in Peachtree 2007.


  1. Find blank and fillable 1096 forms at PDFfiller.
    and 1099 forms http://goo.gl/94GzEO
    You can fill the text fields, add a variety of checkmarks, digitally sign the form and even add pictures. After your pdf form is completed, it can be printed, emailed, faxed or saved on your computer. You can even send fillable pdf forms to your customers, employees, vendors and partners.


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