As a business you have to issue 1099-MISC forms to your vendors. Whenever you begin working with a new vendor, it is important to get the correct tax id and address so that you have the information when needed. It is always easier to get the information before you pay the vendor than after the fact.
For 2011 the reporting requirements have changed and it is important that you understand these changes. Traditionally you issue a 1099-MISC to anyone that is not a corporation that is paid over $600 for services. However, in 2011 how you paid the vendor is important in determining the 1099 requirement and amount.
If you pay a 1099 vendor with a credit card or other 3rd party transaction (defined in the regs), the payment is to be EXCLUDED from any 1099-Misc that you give to that vendor. The 3rd party payor (credit card processor, bank, etc.) will file a 1099-K to report those payments.
If you use QuickBooks v2012 this requirement is addressed with Release 5. You can determine what QuicKBooks Release you are on by clicking F2 within the program and looking at the top of the box. For QuickBooks v2010 and 2011, Intuit is working on an application that you will be able to purchase to address the requirement. The application is expected to be inexpensive (Less than $5) and should be available shortly.
If you would like step by step instructions on using QuicKBooks 2012 to prepare 1099s please take a look at the blog post by Laura Madeira at http://www.quick-training.com/2011/12/21/quickbooks-2012-new-1099-tax-form-wizard-2/. While you are at Laura’s website you can sign up for her newsletter and get a free copy of “What’s New and Improved for QuickBooks 2012”
If you use other accounting packages you may need to find another way to address this requirement. If you need help, please contact us so that we can help you issue correct 1099s.