Account & Tax Set-up for Payments to Subcontractors
I've been awarded a large contract and need to use subcontractors. What's the best account/tax set-up to deal with payments to subs?
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KathyZaro
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11/17/09 11:06am PST
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First, make sure that W-9's have been completed and returned by your subcontractors. You will need that information when you issue 1099s to the subcontractors and a 1096 to the Federal Government at year end. Next, you will want to edit your preferences in your QBs to indicate that you will have 1099 vendors, making sure that you state the floor you want to recognize (IRS says $600 or more), though I have my tax clients send 1099s to all their subcontractors regardless of the amount. This is the best protection of the business owner I can think of to demonstrate legitimate expense and deal with state entities like the WC boards.
The expense account you will want to use depends on whether you want to recognize it as Cost of Goods Sold or regular expense but select one and stick with it. It is easier at year end.
Hopefully this helps, if it does please mark this question solved. If not, please feel free to contact us directly.
Kathy Zaroczynski
Kathy Zaroczynski, E.A.
Zaroczynski and Associates
http://www.zaro1040.com
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Zaroczynski and Associates
http://www.zaro1040.com
"Let us help you succeed."
If this answers your question or helps you, please select helpful answer or mark solved. Thank you.
