As a business owner, you may find it necessary to hire contract labor to help with projects and tasks. While this can be beneficial for your business, you may be unsure of how to properly set up contract labor in QuickBooks. In this article, we will go over step-by-step instructions on how to set up contract labor in QuickBooks.

Step 1: Create a Vendor Profile

To begin, you will need to create a vendor profile for the contract laborer in QuickBooks. To do this, select the “Vendor” tab and click on “New Vendor.” Fill out the required information, including the vendor`s name, address, and contact information. Make sure to check the box that says “Track payments for 1099” as contract laborers are required to receive a 1099 form at the end of the tax year.

Step 2: Set Up Payment Terms

Next, you will need to set up payment terms for the contract laborer. Click on the “Payment Terms” tab in the vendor profile and choose the appropriate payment terms, such as Net 30. You can also set up discounts for early payments if desired.

Step 3: Create a Purchase Order

Once the vendor profile and payment terms are set up, you can create a purchase order for the contract laborer`s services. Go to the “Vendors” tab and select “Create Purchase Order.” Choose the contract laborer as the vendor, enter the services or project details, and set the cost and payment terms.

Step 4: Record Payment

After the contract laborer has completed the project or services, you will need to record the payment. Go to the “Vendors” tab and select “Pay Bills.” Choose the invoice for the contract laborer and enter the payment details, including the payment method and date.

Step 5: Issue 1099 Form

At the end of the tax year, you will need to issue a 1099 form to the contract laborer if the total payments for the year exceed $600. To generate a 1099 form in QuickBooks, go to the “Vendors” tab and select “Print/E-file 1099s.” Follow the instructions to generate and file the form.

In conclusion, managing contract labor in QuickBooks can be simple and efficient if you follow these steps. By setting up vendor profiles, payment terms, purchase orders, and recording payments correctly, you can ensure accurate tracking and reporting of contract labor expenses. Don`t forget to issue a 1099 form at the end of the tax year to comply with IRS regulations.