The 1099 Setup and Process for Solomon IV:

By Duke Swenson

 

Can Solomon print 1099’s for this year’s activity? How does Solomon know what data to store for 1099’s? How do I set up the vendor to accumulate the 1099 amounts correctly? How do I correct the 1099 amount if it is not correct? I just found out that a vendor needs to be added as one of my company’s 1099 candidates for this year. How do I set Solomon to correctly report the new vendor’s 1099 amount for this year?

 

These are all very good questions. Each one of these concerns will be answered in the tutorial. This tutorial below will review the setup screens in the vendor maintenance and AP Setup screens, describe the process that Solomon uses to accumulate the correct 1099 dollars, and the process of correcting or resetting the 1099 amounts for the appropriate 1099 boxes.

 

SUMMARY:

-          Introduction to the 1099 process.

-          Setup the AP Setup screen to account for the 1099 year.

-          Set the Current and Next Year fields to the appropriate years.

-          Identify and select those vendors that should receive a 1099.

-          Correcting the 1099 amounts.

-          Printing the 1099 forms.

 

  1. Introduction to the 1099 process.

The 1099 MISC for is used to report the annual payments to non-incorporated companies that provide service to your company. The information of the amount of money that the 1099 vendor has been paid during the course of a calendar year. The 1099 forms are sent to the vendors by January 31 for the prior year’s payments and should be filed with the US Federal government by the last day of February.

 

As the vendor’s invoice or voucher is entered into the AP Voucher and Adjustment screen and designated to the correct 1099 reporting box, Solomon will record the 1099 amounts by vendor once the vendor’s voucher is paid. It is the year of the check date that determines which year to report it on the 1099.

 

  1. Setting up the AP Setup Screen to Account for the 1099 Year.

1099 Setup information is required by the Internal Revenue Service for certain types of vendors. Setting up 1099-default information can increase the speed of entering vendor documents in Solomon. When you enter a new vendor record, Solomon automatically enters default information for 1099 information.

 

To set up 1099 reporting defaults:

A.  Determine if 1099 reporting is necessary. If at least one vendor requires 1099 reporting, continue with Step B.

B.   Click the 1099 tab on AP Setup (03.950.00). The 1099 tab of AP Setup (03.950.00) displays.

C.   Type the year used to maintain the 1099 Calendar Year control screen in Current 1099 Year.

D.  Select to permit or deny the entry of 1099 information for the current 1099 calendar year from the Current Year Status drop-down list by setting it to Open to permit the entries or Closed to deny the entry of the 1099 informaton.

E.   Type the number of the 1099 calendar year after the current 1099 year in Next 1099 Year.

F.   Select to permit or deny the entry of 1099 information for the next 1099 calendar year from the Next Year Status drop-down list.

G.   Type the maximum amount that can be paid to vendors for goods purchased or services rendered before these amounts become subject to federal 1099 reporting requirements in 1099 Limit.

  1. Click Save on the toolbar.

 

 

  1. Set the Current and Next Year fields to the appropriate years.

Use the 1099 Calendar Year Control (03.530.00) screen to activate and deactivate the entry of vendor 1099 amounts for both the current and next 1099 calendar years. Solomon retains two years worth of 1099 information which allows you to enter information for a new year before the 1099s are processed for the prior year. Also use to allow or prohibit 1099 data entry in the new (next) year and the year just completed (the current year); to purge obsolete 1099 information from Solomon and increment the numbers of the current and next 1099 calendar years (the next 1099 year becomes the current 1099 year) in preparation for 1099 reporting in the new 1099 calendar year.

 

 

As you can see here, the Current 1099 Year is 2002 and the Next 1099 year is 2003. Since we are currently in the 2003 calendar year, the Solomon system must be set to show the Current year as 2003 and the Next year as 2004. If you do not change it, your 1099 amounts will print the amount you paid in 2002, last year.

 

To change the Current year to 2003, use the dropdown arrow to change the Process option from Change Status to Purge Oldest Year. Hit the Begin Processing button just ONCE to start the process of changing the years. Caution: If you double click on the Begin Processing button or push it twice, the 1099 data for 2003, in this case, will be purged as well.

 

Close this screen and reopen it to be sure the process occurred as expected.

 

  1. Identify and select those vendors that should receive a 1099.

In the Vendor maintenance screen for the 1099 vendor, use the 1099 tab to designate that a vendor is subject to 1099 reporting, to enter the vendor's tax identification number, and to define the 1099 box number used for the vendor's 1099 reporting (i.e., the necessary information for vendors to whom you send 1099s). The window also contains fields displaying the totals for the vendor for each of the 1099 boxes for the available years. The years displayed are controlled by 1099 Calendar Year Control (03.530.00).

 

 

 

  1. Correcting the 1099 amounts.

Occasionally you may need to adjust amounts reported on 1099 Forms. For example, the amount on a voucher may not have been coded to the appropriate box on the 1099 or a vendor may not have been set up as a 1099 candidate when vouchers were entered, etc. These types of adjustments are done in the 1099 Info tab.

 

To correct the reporting amounts, first calculate the correct amount paid to the vendor which needs to be reported. Once that figure is obtained, you can use the Initialization Mode in the Options of the Solomon toolbar to allow access to the vendor’s 1099 box. Initialization Mode is active only if you are logged in to Solomon as Sysadmin or your Solomon user Id has initialization rights to the Vendor Maintenance screen.

 

If the Initialization mode is activated, the figures in the vendor’s 1099 tab will show in black rather than gray.

 

Simply enter the amount in the appropriate 1099 box for the correct year and Save the update. If more than one vendor needs to be updated, enter the vendor’s Id and make the corrections.

 

6. Printing the 1099 forms.

Solomon has two reports for 1099 vendors. The 1099 Preview report lists all 1099 information, including vendor tax identification number (TIN), 1099 box amounts, and total payments, to print on the 1099 forms of vendors subject to 1099 reporting. The amounts included on the report are for the calendar year that is designated as the Current 1099 Year in 1099 Calendar Year Control (03.530.00). Vendors are included on this report if they are marked as a 1099 vendor in the Vendor Maintenance (03.270.00), regardless of whether payments to them are sufficient to meet the 1099 limits.

 

 

Generate and review this report prior to printing actual 1099 forms to ensure the accuracy of all 1099 information reported for the current calendar year. For each vendor who is a 1099 vendor but for whom Solomon does not have a TIN record, the words "Request TIN from vendor" appear under TIN (the space usually used for the number. In this case, you need to obtain the TIN from the vendor, and enter the number in the 1099 Info tab of Vendor Maintenance (03.270.00) prior to printing 1099s.

 

The second report is the 1099 Forms report (03.740.00). Prints 1099-MISC forms for all vendors subject to 1099 reporting. If you are reporting electronically (computer diskette), use the 1099 Magnetic Media Generation (03.742.00). Print 1099 forms after the 1099 Preview (03.730.00) report has been reviewed and any necessary adjustments are made to the 1099 amounts.

 

 

Situations may occur when you need to print one 1099 form or a range of two or three 1099 forms. This can be accomplished by adding a select statement on the Select tab of 1099 Forms (03.740.00), for example:

 

§    Field: vs_1099info.vendid

§    Operator: Equal

§    Value: VT0110 (use your vendor ID here)

§    Boolean: And

 

 

The 1099-MISC forms can be printed as many times as needed. Usually the package of 1099-MISC forms has several copies for you to print. One goes to the vendor, one is saved by your organization, the red forms are for the Internal Revenue filing, and the others are available for the state and local government filings, if required.

 

CONCLUSION:

The 1099 process starts with the proper set up. Once the vendor has been selected as a 1099 candidate, the default box should be set to the on appropriate for that vendor. Most often, the default is set to Box 7 - Nonemployee Compensation. As the vendor’s voucher is entered, the transaction line or lines of the entry need to be associated with the correct 1099 reporting box. The vendor’s default will populate the field.

 

If corrections are needed, use the Initialization mode to restate the correct amount paid to the vendor for the year. Print the 1099 Preview to review the vendor’s reporting amounts. Use the 1099 forms report screen to print the 1099-MISC forms.

 

I hope this has helped you with your 1099 process. If you have any questions, please feel welcome to contact us. We are here to help you get your work done quicker.