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One of the reasons, duplicate vendors happen in the first place is because a Bookkeeper doesn't check to see if that vendor already exists.
Suppose the vendor "Tony Smith" is already in the system. Then, a new vendor named "Tony's Flooring" is added, but they refer to the same individual. When the Bookkeeper reviews the reports to identify contractors who have been paid over $600, a discrepancy may arise because the same person is listed under two different names. Tony Smith might have received $300, which isn't even the legal business name under which he should be paid. Additionally, Tony's Flooring might have been paid $300, making it appear as though he doesn't require a 1099. This could lead to your business failing to submit a necessary 1099, and if audited, you might face penalties.
This could lead to your business failing to submit a necessary 1099, and if audited, you might face penalties.
Ideally, once the remodeler or General Contractor (GC) received a quote from the individual and agreed to collaborate, an email should have been sent to him with all the necessary paperwork, including a W9 form to complete. He should not be permitted on the job site until these forms are collected. The required forms include: W9, business license, certificate of insurance showing liability and worker's compensation or proof of exemption. Obtaining all these documents from a professional contractor protects your business from liabilities, such as hiring someone who is unauthorized or unprotected, which could then become your business's responsibility.
Obtaining all these documents from a professional contractor protects your business from liabilities, such as hiring someone who is unauthorized or unprotected, which could then become your business's responsibility.
After receiving the paperwork, your Bookkeeper can input the information directly into Quickbooks (with the correct legal name) and mark the contractor for 1099 tracking to avoid 1099 reporting headaches. The paperwork can be attached directly within the contact. When January comes, you can simply navigate to the 1099 section and process them electronically.
Boom! You are compliant and don't have to stress about penalties.
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