How to Pay 1099 Vendors

1099 Vendors

1099 vendors are independent contractors who don’t receive a W2 form from the companies they work with. This can be confusing, especially when it comes to figuring out how to pay them correctly. The IRS has clear guidelines for 1099 vendors, and understanding these regulations is essential if you want to ensure that you are following the law. In this blog post, we will explore what it means to be a 1099 vendor, the rules around payment, and best practices for paying them on time. Read on to learn more about how to pay 1099 vendors properly!

Sage 50 is well-appreciated by the business community all around the world for its amazing tools and features. It incorporated special features to help businesses while filing annual taxes as well. With this accounting software, you can do e-filing of the 1099 Forms with effortless ease. In this blog, we will discuss who are 1099 vendors, how to pay them and how to do e-filing of 1099 Forms through Sage 50.

What is a 1099 Vendor?

A 1099 vendor is a business or a person who performs some work for you but he can not be your employee. Such vendors are called so because they must receive an IRS Form 1099 from you if you pay over $600 to them per fiscal year. You can send the Form 1099 even if they are not paid beyond $600, just to keep your accounting books streamlined. Before making any such payments to 1099 vendors, you should gather all information about them so that they file 1099 forms properly during the tax time.

Read More : Where is Accounts Payable in Sage 50 2015 for 1099 Correction

What are the Steps involved while Paying the 1099 Vendors?

Please follow the steps below to pay the 1099 vendors-

Step 1-  Ask for a signed W-9 Form from the 1099 vendor before starting to work with him. You may download this form through the IRS website. In the W-9 form, the vendor needs to fill up details such as his name, address, business name and employer identification number. If the vendor is working under his personal SSN (Social Security Numbers), he must provide the same as well.

Step 2- You must request an invoice from the 1099 vendor for every pay cycle. The invoice must include details such as the date of the service, the amount due for the services, the total bill for the purchase of goods, total billable hours and so on. It should also include applicable taxes or fees like shipping, handling etc.

Step 3- While paying the 1099 vendor, do ensure that you pay him with a check or electronic funds transfer. The check or the fund transfer reference number should note the invoice number or the transfer memo. As the 1099 vendor is not your employee, there is no need as such to withhold retirement benefits, worker’s compensation or other taxes.

Step 4- You need to send the IRS and the vendor a 1099 before 31st January 31 of the year following the tax year. Use the information included on the W-9 form to complete the 1099. As you can find out, Form 1099 contains the taxable income earned by the 1099 vendor from you and this information will be matched by the IRS with that mentioned in the vendor’s tax returns.

What is the Procedure to e-file Form 1099 in Sage 50?

Follow the given steps mentioned below:

Procedure 1: Select the Proper Form

  • Click to open the Employees & Payroll section
  • Click on Forms
  • Select Federal Forms /Reports & Forms,
  • Click Tax Forms.
  • Double-click on Payroll Tax Forms
  • Browse to the Available Forms section 
  • Select the [Year] 1099-INT [Year] or 1099–MISC 
  • Specify the Filing period as Yearly
  • Select the correct year
  • Click OK
  • The 1099 Setup Wizard window will be displayed on your screen
  • Choose your suitable option, 
  • Click Next

Procedure 2: Verify the Information

  • Check whether the Payer Identification Number is correct
  • Choose the correct EIN/SSN
  • Click Next to proceed
  • Verify the Payer information
  • Click Next 
  • Choose the proper Tax Preparer Type
  • Click on Next
  • The Third-Party Preparer Information window will pop up
  • provide the required details in appropriate fields
  • Click Next 
  • Verify if the State and Locality authority/items are correct, 
  • Click Next.
  • Select suitable options on the Data Verification window 
  • Click on Next.
  • Choose suitable options on the Recipient Identification Numbers window
  • Click on Next.
  • Choose suitable options on the Multiple Data Files window
  • Click Next.
  • The W2/1099 Preparer worksheet will be displayed on your screen 
  • Check if the highlighted information is correct 
  • Click on Next Step 
  • Check if the highlighted information is correct
  • Click on Next Step till the 1099 Printing and Filing Options window appears

Procedure 3: E-file and Print the 1099s

  • Click on Select My Own Options, if you want to print
  • Now select the forms to print 
  • Click Next  
  • Check if the selections you made from the previous page are correct 
  • Click Next.
  • Choose the suitable option for divider sheets
  • Click Next to proceed
  • Click Next if you want to Review Data.
  • Now click on Next Step  
  • Click OK.
  • Click on the Next Step tab again. Repeat this process if you want to review all the forms. 
  • Select the option named Complete 1099 e-filing Service.
  • To e-file the 1099 Form, select the option named Complete 1099 e-filing Service.
  • The Aatrix Secure e-file window will be displayed on your screen.
  • Perform the on-screen instructions to complete the process.

Also Read : How to Generating 1099 MISC Forms from Sage 300


Paying 1099 vendors has never been easier. With the help of this article, we have provided you with a comprehensive guide on how to pay 1099 vendors and what steps need to be taken in order for your payment to go through efficiently. A few simple tips can save you both time and money when it comes to paying 1099 vendors, so make sure that you take advantage of them!

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Frequently Asked Questions(FAQs)

What is Reported on a Form 1099-MISC?

Different types of payments are included on Form 1099-MISC. The boxes mostly used are as follows:
1. Box 1- To report amounts you paid for rent ( against machinery, real estate, and equipment )
2. Box 2- To report royalty payments, including the royalty fees you paid to the franchisors.
3. Box 3- To report other income including awards and prizes where services were not provided and wages of deceased employees to the beneficiaries.

What is the Deadline to File 1099s?

You must file Form 1099-NEC with the IRS and send it to the vendors by 31st January of the following year.
As regards the Form 1099-MISC, it needs to be furnished to the vendors by 31st January of the following year. However, you have time till 28th February to file the same with the IRS. For e-filing, the deadline is extended till March 31st.

How to Pay a 1099 Vendor

Assuming you have the 1099 form for the vendor in question, there are a few ways to pay them:

1. Check : You can simply write a check from your personal or business account to the vendor. Be sure to include the 1099 form with the payment so they can properly document it.
2. Electronic Funds Transfer (EFT) : Many banks offer this service, which allows you to electronically send money from your account to another. This is usually done through the ACH network and you will need the vendor’s banking information in order to set it up. Again, be sure to include the 1099 form with the payment.
3. Credit Card : You can also pay vendors with a credit card, but be aware that most cards charge a fee for doing so (usually around 3%). Also, if you are using a personal credit card, you will need to be extra careful to track expenses and make sure they are coded correctly in your accounting system so as not to mix personal and business expenses.
4. PayPal : PayPal is probably the easiest way to pay vendors online, and many accept this method of payment. There is no fee for using PayPal if you use your bank account or balance; however, there is a fee for using a credit or debit card (2.9% + $0.30 per transaction). As with paying by credit card, if you are using a personal PayPal account, make sure you carefully track expenses and code them correctly

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