Using Tags in QuickBooks for tracking 1099s

Hi there, Linda Artesani, Artesani Accounting. This week we're going to talk about tagging transactions in QuickBooks and how you can use the system of tagging to prepare really quickly for 1099 season, which is, ooh, just around the corner. And that's mainly the reason why I use tags. It's the use case around me using tags. I have not really found a lot of reasons why tags work. Of course, I live in the world of QuickBooks Online Advanced, which we have custom fields, and custom fields could definitely be used this way. But if you have multiple clients or clients that are going to need to— you're going to need to process 1099s for— this is a way to be able to tag the transactions and separate transactions that are maybe for 1099-MISC form versus the 1099-NEC. Remember, that was something that was a recent change. Actually, it was an old, old way of doing it that they brought back. NEC is for non-employee compensation. So anybody who worked at your firm that's not an employee but that's a contractor, you want to tag those transactions as such so you can process the 1099-NECs. Those are due in the end of January. Of any calendar year. And then the miscellaneous forms are due the following month. They're due at the end of February. And miscellaneous is more for transact— more for vendors that if you pay your rent, you usually have to send one to the landlord for the rent that you've spent money on. There is also a box for attorneys, and this is where it gets a little bit complex when you work for attorneys and law firms. But this box for attorneys is for any firm that spends money on legal representation. for the firm. So you could be working with a law firm that has its own counsel. Maybe they got audited and they had to hire another law firm to represent them in an audit. That attorney or law firm would have to get a 1099-MISC form. It's a topic that we touch upon at the Accountant's Law Lab because of the complexity of it. It's a lot of nuances when you work with 1099s and law firms. And it's a topic I'm sure we're going to revisit next January because it's one of those topics that has a lot of questions that come up when you work with law firms. However, getting back to tagging, I'm going to show you how I use tagging. So if you have picked up many clients during the year, new clients that have been working with for the year, and you have really not thought about 1099s, now's a great time to Tag the vendors, provide that report to the attorney or the— or your client and say, are these necessary to receive a 1099? And then maybe even shoot that report out to Google, sort it by the vendor, kind of total it up, and then make a column for— with a checkbox for whether you've received the W-9. This is going to give you that little extra cushion of time to find the W-9 and get that filled out before you're up against it with the deadline. Let me share my screen. I'm going to show you how to create a 1099 grouping and then how to use it to tag your vendors so that you've got reports that you can create kind of that pre-getting ready for 1099 season. This is what this tagging is used for in this system that I've developed, but it is certainly a way to, at a high level, be able to see which clients— which vendors get 1099-NEC as opposed to 1099-Miscellaneous. There's really no way to delineate that within QuickBooks. But if you start to tag now, you'll have that report that you can pull up really quickly, especially if you're not using QuickBooks to process 1099s. Maybe you're using Track 1099. You're going to be able to produce a report that you can very quickly create that was going to give you the totals and everything that you need when you process them next year. Let me share my screen. I'll show you how to do these in a particular order and steps that will help you get to this place where you're sitting back in January, like, I am all set with my 1099s. It'll be a nice smooth season. And I'll show you the reports for tagging before we really dig deep here. How I find reports is I come up to this top bar and I'll just type the word tag in here. And you can see there's only 2 reports, Profit and Loss by Tag Group. So if you wanted to tag transactions to get a listing of what's in a specific category, that's what that report is for. Not really what I'm using it for. And a Transaction List by Tag Group. So that's it. That's all you get for reporting on tags. That's why tags isn't really that powerful. But it's effective year. Now, the first thing I do is I come up here and I'm going to go— let me just move my picture a little bit. I'm going to make it— I'm going to go for a vendor transaction list. I want to look at a really high level. Um, and typing vendor transaction list by vendor, and I want to look at it for the year. So I'm going to come over here and it's, it's by default, it's this month to date, and I just want to go by the calendar year. So I want to go to this year. I think it's in here somewhere, this calendar year. And you can do this calendar year to date as well, and then hit Run Report. So this is going to give me a list of every vendor that I've paid transactions, bill, bill payment. Obviously, I've had both there. It's giving you every transaction by the vendor for the entire year. And I just kind of go through this list and I just look and I say, hmm, who in here might need to get a 1099? Right? So I'm looking here and I know that this Lee, Lee County Clerk's Office is going to get a 1099. And then I know Ace Reporters, so I will just grab those 2. Now I'm going to go back to tagging. And I'm going to go to any untagged. And then obviously I'm tagging for 1099 purposes, and I want to be able to separate NEC from, from miscellaneous. So I'm going to come over here and I'm going to filter this list. And it's— this is now filtered by untagged, and I want to create some filters. Let's see if I can get that to come up. And I want it only on money out transactions. I don't want it on money in. Those deposits are not relevant here. And then for the date range, I want to do this year. I'm going to pick this year, and then I'm going to just pick— I know Lee County because I looked at that other report— Lee County Clerk's Office. I want to show that they get a 1099. I don't think I have any transactions for 2021 in here. So then I'm going to take them off and I'm going to go maybe for ACE reporters because I noticed that they also might need it. So I'm going to go filter down. I'm going to pick my contact ACE reporter. And if there's a lot of transactions here, I would be able to run and put tags on them very quickly. I only have one, but I would click this top box and I would update the tags. And for here, I know that they're going to need an NEC, so So I'm just going to type in NEC over here. And very quickly, I want to select this one because I know it's part of my group. I remember it was the gray one because I have multiple here. You probably won't have multiple. And I'm going to hit Apply. And that one's going to now be tagged. So now when I come in to create that report that I showed you earlier, I'm going to show that those tagged lists— I'm looking for that vendor list that I'm going to push into QuickBooks, into Excel or a Google Sheet. Actually, a Google Sheet would be better. Push it into a Google Sheet and then add a column for, did I get the W-9 for these people? And then you can pretty much pull that down and just give that to maybe the people that work in the office that are in charge of tracking these. Maybe you can go and have that list just be the list for the client to say yes or no, do they get a 1099? So you're pretty much just getting ready for 1099 season. So you'd come back over to Reports. And then I'm going to run that report again. Tag. I'm going to run the Transaction List by Tag Group. And then it comes up by default Ungrouped Tags. So you might go, oh my goodness, it's not here. But then I'm going to go for my group, which is my 1099 group, and I'm going to run the report. And hopefully— oh, I got to change the date to this fiscal year. I thought I picked that, but I guess I didn't. Let's go back here. This calendar year, run the report, and now ACE reporting can show up. And now you can see that all of the Lee County ones were also tagged. So this is my NEC. Now, if I had maybe the rent that I paid to whomever paying the rent to, that would show up under miscellaneous. So I'd have a separate whole box for that. That's really powerful if you're using like track 1099. You're having this report that shows exactly who gets what 1099s. So that's really the purpose of this. And then if I just go into the, the actual transaction itself, And this is a bill, so you want to be careful there in case the bill wasn't, um, tracked. You can see there's my tag, and then you can have that there for tracking. Now, once I get the information from the W-9, now I can come into Expenses, find ACE Reporter— ACE Reporting and ACE Reporters— and then come in here, and then I can come and edit And then I can come over and check this box off and put their ID in here, their FEIN, their SSN, whatever their tax ID is that I got off my W-9. Now I put that in here. Why do you want to do that? Well, if you are processing 1099s inside of QuickBooks, especially if the client has payroll with QuickBooks, guess what? It's free. You can process the 1099s for free besides your time. But that's a great perk of having payroll with QuickBooks. But there is some reports in here that once you have all that done— so you go to the vendor transaction list, you go and tag all the transactions. So now they're tagged by the type of 1099 that you're going to be producing. And then all you have to do is come over here and let's go to 1099. And now you can do a transaction detail report, a balance summary report, and they'd have to be tagged with the with the FEIN number. I don't think I have any tagged, but that would produce this report that's going to show all my vendors that have that attached to it. As you can see here, I do have a contractor that's set up with the number in it. And now I can produce the 1099s by just coming over to— I don't think this one has payroll, but you would be able to do it right through payroll, process the 1099s. It's very fast, simple, and quick. And it's just a matter of going into each vendor, putting that FEIN number in or the social in, producing this report in January and then processing that. If you're doing it outside of QuickBooks, then you're going to be able to go to that report that you just did with the tagging and then take that data as well as this data. I'd still use the functionality of QuickBooks putting those socials in so you'd be able to run this report that you'll be able to see that Alva Bushnell needs it and you'd be able to put that in with a total and you'd have that ready for your client. It's very simple this way. It's almost a— A way to get ready. Who doesn't want to get ready for end of the year stuff? Get your clients' files ready. Right now we're going through all the files, making sure everything's in the right buckets, using the reclass tool, making sure every client that we have now is prepared perfectly. And you should be doing that monthly anyway. We've got that new month-end review feature, which is gold when you're trying to get ready for the end of the year. And then getting the files ready, pre-ready in December, so you only really have to look at one month of your existing clients because we all know When January comes, that's when we get really a lot more of an influx of clients that are new to us that might have messy files. And it's hard to focus on that when you're trying to get your existing clients, the ones that have been paying you all year, ready. Why not do it now? It's a little bit of a slow time. There's no tax deadlines per se other than payroll things. Why not get these things ready now and get yourself set up for a successful, peaceful tax season? For us bookkeepers, January, February, we get a little bit crazy. This is the time of the year you want to get your existing files ready. So I hope that's helpful. If you're an accountant or bookkeeper, join our Accountants Law Lab group. It's really— this is the topics that we go through. We actually go through in great detail what kind of 1099 is, what client, what vendor needs a 1099. When you work with law firms, it's pretty complex, especially when you get into personal injury attorneys in different practice areas. It can get very complex. It's the topic we've already had a meeting on that, but we'll probably be doing another one in January. And then there's also, if you work at a law firm or you're an attorney, you might want to reach out. We can help you with getting your data ready for year-end and getting your 1099 processes happening with ease. And don't forget to hit the subscribe button to keep following for more videos. And on that note, I hope you all have a wonderful, wonderful week. Bye now. Bye.