1099 Set Up and Process

September 25, 2026 12:28

1099 Setup and Process

v21b1

Setting up Employee/Sub Contractors and Vendors for use with 1099 forms. NOTE: In order to have entries registered as a Payment, the installer payable has to go through the AP > Bills Due > Payment process. This creates a blue “voucher” that, once Accepted/Posted, are registered on the 1099 Declared Labor Wage report.

Disclaimer

Pacific Solutions is not an accounting firm. Please check with your Certified Accountant to ensure that any method you use to withhold earnings (deductions) from a Subcontractor’s check are approved.

Set Up

1099 Set Up Video - 2 Minutes

https://youtu.be/FoFxxKI-4PQ

Go into Admin > Employee/Subs and ensure that every person who needs to receive a 1099 is marked as 1099 recipient / Non-employee compensation(NEC or Other) on the Accounting tab. Double check their Tax ID#s here as well. If any changes were made, be sure to Accept the record.

Process Procedures

Running and Printing 1099 Reports Video - 3:30 Minutes

https://youtu.be/jRnNxo3rZB8

Running the 1099’s is a three-part process:

Go into Navigator > Reports > Accounting > 1099’s and set your date parameter.
Review the report. If you need to amend anything, make those amendments and then rerun the report.
Click on the first record and enter your official company info and tax ID#. (Only need to put it on the first one, all the others will now populate) and Print from there.
Printing on the official forms: Purchase the pre-printed forms, load them in the printer, and then click Print. NOTE: Print a few tests on plain paper and check the alignment before loading the real documents.

Previous Versions

V20 and Prior

Deductions

There may be reasons a company wants to make deductions from a subcontractor’s check, such as Material Reimbursements, insurance deductions, retention, etc. It is very important to realize that the method used to process these deductions in the system can affect the installer’s 1099 (declared labor wages) report.

AP > Bills Due > Payments populate on the 1099 report

One way to process installer deductions is to pull everything out through the AP > Bills Due > Payment screen. In this manner, every deduction is treated as a “payment” to the desired GL accounts, and is captured on the 1099 report.

For example, I have an installer who worked this week and earned $700 in labor wages. If there were no deductions, we would take the WO to the AP Payable. Once accepted, we would go to the AP > Bills Due screen and process a Payment of $700. If I were to run the 1099 report, the total would be $700.

If we needed to withhold retention, or insurance, or anything else from the installer’s check, we would process and accept the $700 WO as usual. Now I have an AP voucher worth $700.

On the AP > Bills Due > Payment screen, we enter an Applied Amount of $50 payable to the Worker’s Comp Insurance GL account. (NOTE: in order to see the GL you desire in the Payment screen, you must set it as a “payment” type account in the Ledger area.) We process the deduction as a “payment” to the Worker’s Comp GL account.

Now we go back to the AP > Bills due screen, and see the balance remaining of $650 to the installer. We process the payment to the checking account as usual. He gets a check for $650. When I run the 1099 report, the amount will be $700 because both “payments” were registered on the AP > Bills Due > Payments screen.

Omitting Deductions from the 1099 Report

Check with your accountant and your local tax laws before omitting deductions from the 1099 report.

Certain "Payment" type GL's can be set to "Disable 1099" and monies "paid" into those accounts will not appear on the 1099 reports. You can “disable” these payment type account GLs in the Bank Accounts list (Navigator > Bank Accounts). The 1099 report will omit the funds directed as "payments" to these accounts and report only the amounts to the paid the sub-contractor via the other payment GLs.

Also, specific payment vouchers (checks) can be individually marked as "Omit on 1099" at the top of the blue, check voucher screens (access through the Bank Account screen).

AP Credits do not populate the 1099 report

Deductions that are processed by creating “credits” in the AP system will result in both a lower check amount (payment) in the AP > Bills Due area, lower $$ Payments/checks, and it will also reduce the declared labor wage report. 1099 Declared Labor Wages are reported by the payments issued to a subcontractor/installer account. So if the payment amount was reduced by credits posted, thus the 1099 report was also reduced.

Those credit postings did make entries into various GL accounts when the AP credit was accepted. In order to get accurate labor wage reports, it may be necessary to compile the total declarable labor wages by combining the totals of payments made plus the GL entries that were deducted during that time period. Thus the 1099 forms would have to be manually filled in.

End Result Summary

The system looks for any payment postings made to this installer’s 1099-marked account through a Payment Type GL account such as the checking account. Payment Type GL’s are designated as Payment Type in the Admin > Ledger area. The system then pulls all the information from the register of the payment account(s) and fills in the information needed to complete the 1099 format.

NOTE: In order to have entries registered as a Payment, the installer payable has to go through the AP > Bills Due > Payment process. This creates a blue “voucher” that, once Accepted/Posted, is registered on the 1099 report.

Financial Implications

Depending on the method used to withhold monies from the Subcontractor’s check, the 1099 report may reflect the same or less than the actual amount of labor monies earned.

The system knows that anyone who made less than $600 does not need a 1099 and therefore will not create one.