Using QuickBooks Online and Form 1099

QuickBooks 1099 Time

It's QuickBooks 1099  time  and you need to prepare your business’s Form 1099s which  is due February 28.   Hopefully you haven't waited for the last moment to use  QuickBooks 1099 module, which is typically the case for most small businesses. Although this blog post is designed for users of QuickBooks Online, the QuickBooks 1099  tips may be used for other versions of QuickBooks and other small business accounting software. This article will not discuss what payment qualifies as a 1099 recipient or how to print the form 1099. It discusses a way to check the information and provides some planning tips for next year.

It's important to make sure that the information appearing in each form 1099 is accurate and represents the cash transactions that occurred for the year that has just ended. The furthest thing from your mind  is to have a vendor or stockholder or any person who received the form 1099 to  call you up to complain that the QuickBooks 1099  they just received is incorrect. Not only is that embarrassing, it’s a  waste of time because now you have to amend the QuickBooks 1099  and probably pay fees to have the QuickBooks 1099   amended.


Verify the information  being used  to file the QuickBooks 1099 with the IRS

It’s important to make sure the QuickBooks 1099  information is correct before you send it out. You can perform this check by  reviewing the information that is in the form 1099. Fortunately, QuickBooks 1099  makes this easy, by allowing you  to drill down for each  1099 recipient and you will see the detail payments  for each 1099 recipient before its transmitted to the payee.  It's important that the information appearing in the form 1099 is an actual cash payment made during the preceding year. The information in the Form 1099 should not include  accounts payable or anything else. You can verify the QuickBooks 1099  information  in two ways. The first is look at the QuickBooks 1099  detail transactions comprising the 1099 summary amount directly from a 1099 report,  and the second, is to look at the accounts payable detail as of December 31 to make sure that the payables are not included in the amounts being reported in the form 1099. From within QuickBooks Online you do this by drilling down on the amount shown in the summary QuickBooks 1099  form.

You can watch  a very short video explaining the drill down procedure or skip the video and look at these screenshots. Here is the video

QuickBooks 1099 Planning Tip
The most important tip, is to  plan to gather all of the payee information such as correct name, address and Taxpayer ID number in advance of preparing the form 1099s and more importantly to carefully read the IRS Instructions for Form 1099 –MISC and make sure that you are reporting the correct types of  payees . The way you can do this, is to set up a policy and procedure for the book keeper to prepare a  simple one-page new vendor setup form, that has the vendor’s name, address, email,website,tax payer ID number,account to be coded and budgeted amount for the year.The new vendor set up form should be approved by the owner . This form ensures that your bookkeeper is obtaining the vendor and the  QuickBooks 1099  information timely and more importantly that only vendors known to the owner are being properly set up and paid.

If you are like most users, it’s hard to believe that you cannot prepare the Form 1096 from QuickBooks Online. We are waiting for Intuit to make that change to their QuickBooks 1099  drop down.

Stockholder Loan Transactions in QuickBooks Online Essentials or Online Plus

QuickBooks Online Stockholder Transactions

This video will will briefly explain a typical stockholder/business owner transaction and show you how to record the transactions for QuickBooks Online. For more information about each type of transaction i.e. capital investment,Stockholder Advances,Loans to the business,Draws,Dividends and Stock Subscriptions, please see my other post on this topic. The logic and general classification will be similar for QuickBooks Pro, Premier or just about any other accounting software program.

Big Tip..Make sure that you maximize the screen in YouTube while you view the video

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Customizing QuickBooks Online(QBO) Reports for checks and other withdrawals

What Happened to the Free Online Version of Simple Start ?

QuickBooks Online accounting provides the essential accounting tools necessary to operate a business and the freedom to access financial information from work, the road or home. Simple Start is a free and bare bones version offered by Intuit, the maker of QuickBooks. Simple Start may be able to assist you in the operation of your business and even your personal finances. But before you start searching for Simple Start its important to know that Intuit has decided to begin to phase out the the free version of Simple Start.

As the Intuit website simply states, Simple Start can (a)Track sales, expenses & customers, (b)Instantly create invoices, (c)pay bills, & print checks and (d) Organize your finances in one place-ready for tax time. All this sounds good, but when you take a close look, Simple Start has serious limitations, but for some people or businesses, it might have a place.

Intuit has a free QuickBooks Online option, called QuickBooks Simple Start. Its free but has limited functionality. i.e. limited to 5 customers(but unlimited vendors) and lacks accounts payable recording and reporting,lack of budgeting,estimating,financial reporting and I can list more and more. Notwithstanding, these critical shortcomings, it may work for some.

I have installed Simple Starts on both Macs and PC's. My clients that use both Macs and PC's like the ability to use QuickBooks on either platform. I have seen Simple Start work for a few of my very small business clients, who use it to summarize their business activities for their tax returns rather than for real time financial information. If you use PC in your office and a Mac at home, you can share the data which is kept in the cloud. Most business owners really like this feature. I have been able to set up their chart of accounts from my PC and then my clients are able to instantly use the software.

During the sign in process for Simple Start, Inuit asks for your credit card. Don't think this is a scam to get you sign up or sell you more products. They actually do not charge your credit card, until you purchase it. You will quickly realize how well it captures your cash activities, and will probably want to upgrade to either QuickBooks Online Basic or QuickBooks Online Plus because of the software's function shortcomings.

Unfortunately, another shortcoming of both Simple Start and QuickBooks Online Basic is their inability to properly record and monitor accounts payable,monitor and pay multiple vendors at once.This is important if you want to be able to track your payables and be able to pay multiple vendors at one time Also, Simple Start does not offer a Statement of Cashflows. This statement shows you where and to what accounts your cash was spent.Its a very important financial statement to help a small business owner understand the sources and uses of cash in the operation of their business.

In summary, some people like Simple Start because its free and "simple". Once again, like all QuickBooks Online products it works with any PC and Mac. If you want a free version of Simple Start, simply visit my website and go to the Quickbooks online page and you will have direct access to an Intuit link for free a version of Simple Start, which is currently available as of the date of the writing of this blog post.

Learn how QuickBooks Online provides the essential online accounting tools to manage your business and the freedom to access your financials from work, home, or the road. Sandor Lenner, C.P.A./M.B.A has been providing accounting services for 35 years. He is also a Certified QuickBooks ProAdvisor and works as a part-time consultant for a Miami Accounting CPA firm.

How to Reconcile Your Bank Account with the Automatic Bank Reconciliation with QuickBooks Online Plus for the First Time

Reconciling QuickBooks Online Bank Account

If you just made the transition to use QuickBooks Online Plus, congratulations.  Now I hope  you want to use the automatic bank reconciliation that is included with QuickBooks Online Plus. The problem exists that there is no mechanism to enter checks that were outstanding in your bank reconciliation for the month prior to your conversion to QuickBooks Online Plus. After researching the Intuit website and Google there is no guidance for this fundamental topic.

The workaround is very easy. Before I get into the specifics, what needs to occur, is that the outstanding checks that exist  for the month prior to your conversion QuickBooks Online Plus  must be recorded into QuickBooks Online Plus. To accomplish this 3 steps are required.

QuickBooks Online Bank Reconciliations Tips

Step 1–Pick  any day prior to your  conversion date.  For instance if you are beginning the year January 1, 2010, then select a date in December of 2009 and make a journal entry to temporarily add cash to the QuickBooks Online Plus  bank account because in the next step you will have to reduce the cash by the amount of the outstanding checks in order for the outstanding checks to be reflected within the QuickBooks Online Plus  automatic bank reconciliation. To accomplish this, prepare a journal entry as if you are making a deposit, with a debit to the bank account and credit opening balance equity account for the amount of the outstanding checks.

Step 2-- Temporarily set up a vendor to be used when entering the outstanding checks  and call the vendor “Prior months outstanding checks”. Now, enter each outstanding check through the Enter bills (and the account being debited would be the opening balance equity account instead of a typical expense account) drop down menu within  QuickBooks Online Plus  and record a  description such as “prior months outstanding checks”  so that there is a trail relating to this adjustment. Be sure  not to assign amounts to the expense accounts, since you are debiting the opening balance equity account. In summary, this entry sets up a temporary payable that you are about to pay in step three.

Step 3-- Now go into the drop down menu called “Pay One Vendor”  and pay each bill using the date shown in your outstanding list. This step relieves the payable and effectively causes the check to be outstanding  for the QuickBooks automatic bank reconciliation. Using Pay One Vendor is a better option to control the check number of the bill payment.

In summary, you have recorded the outstanding check without any effect on cash because the increase in the cash in step 1 is reduced by the decrease in cash in step 3. In addition,  the account payable that was set up in Step 2  has been reduced by  the payment in step 3,  and the opening balance  equity that is set up in step 1 is offset by the establishment of the payable which effectively debits the opening equity balance through step 2.

After I figured out how to accomplish this work around, it took 15 minutes to record the adjustments to have the QuickBooks Online Plus  automatic bank reconciliation reflect the prior periods outstanding checks. The second month literally took 5 seconds to reconcile and the automatic bank reconciliation worked perfectly as intended.

Sandor Lenner, C.P.A. has been providing accounting services for 35 years. He is also a Certified QuickBooks ProAdvisor and works as a consultant for a Miami Accounting CPA firm where he provides QuickBooks support and QuickBooks consulting.

QuickBooks Online Plus is a Helpful Tool for Small Business Owners to Monitor their Business by Product Line,Service Line,Division,Project or Property

Several months ago,  I decided to focus in QuickBooks Online accounting. The more I'm exposed to this  accounting program the more I learn how dynamic and how helpful this program is for many of my small business clients. The most outstanding feature of QuickBooks Online is the ability for multiple users to access their accounting software from any location,any office, any time, as long as they have Internet access. As I've mentioned in a  previous blog post, Simple Start by QuickBooks  is a very stripped down version of QuickBooks Online and has limited functionality,  yet it  can be used in certain situations, and best of all, its free.  This particular blog post deals with QuickBooks Online Plus.

Recently,  I was asked by one of my clients to assist them in the preparation of Form 1099 for their various real estate agents  who worked on different properties here in south Florida. It was very simple question, and the answer is yes. QuickBooks Online is able to print out 1099s as well as track and accumulate all the information for each of my clients selling agents across different properties.It also keeps basic personal  information for each contractor. The question that the client asked me, was whether or not QuickBooks Online Plus would be able to handle multiple projects since he represented different properties and want to track each property's  profitability as it related to his business. The answer, once again,  was yes, it  he can handle multiple properties through its class tracking functionality. Then I was asked another question whether or not the QuickBooks Online Plus can print  1099s for each selling agent who worked on different properties while using the class feature. In other words, does  the class feature work,  when issuing 1099s for subcontractors and allow the client to monitor the activities for each selling agent for each property. The answer was again,yes.

The class feature is often confused and under utilized, but it is a very important and dynamic functionality that most small business owners should be using to monitor their profitability by project,division,product line,service line and etc.

QuickBooks Simple Start Can Help Very Small Businesses

Learn more about another QuickBooks Online option, called at QuickBooks Simple Start, its free but has limited functionality. i.e. limited to 5 customers(but unlimited vendors). I  have seen this accounting software  work for a few of my very small business clients, who use it to summarize their business activities for their tax returns.I have just installed three Simple Starts or Macs. To learn more about Simple Start and to compare it other versions just click here to get Simple Start.

Some people really find it useful and it's really free. Like all QuickBooks Online products it works with any PC and Macs.  Grab it now !