1099s must be sent out by the last day of January, and if you need a refresher or first-time walkthrough for editing and generating 1099s in Business Central, we’re here to help.

Setting up 1099 Vendors

Let’s set up Vendors as 1099 vendors and get their codes established.

• Head to the Payment Tab on a Vendor’s Card. Under the IRS 1099 Code field, identify which code the vendor falls under. The IRS specific codes are already included in Business Central by default—you can either select a code from the dropdown menu that shows the code and description, or you can open the full list to see additional fields, like the minimal reportable amounts. Setting this code will tag the purchase invoices and credit memo ledger entries appropriately for reporting.

•  Enter the company’s specific Federal ID Number into that field.

•  And identify the Tax Identification Type, either “Legal Entity” or “Natural Person,” which makes the distinction between an organization or an individual.

A note here: You want to ensure your vendors are tagged correctly from the beginning of your interactions with them, because they do not retroactively tag or report properly. This is both a benefit and a drawback depending on the situation. While this is inconvenient if you forget to assign a tag initially, it’s helpful for situations where your vendors change codes midway through the year because Business Central allows a vendor code to switch at any time to reflect that. If done properly, this can mean more accurate reporting overall.

Reviewing and Updating

Now, if you need to update invoices/payments for any 1099 vendors, you’ll want to edit the vendor ledger entries for both invoices and payments by updating both the IRS 1099 Code and the IRS 1099 Amount. For most transactions, this would be the same as the Transaction amount.

Another note: Set up for vendors and updating invoices/payments are two processes that can be completed via Configuration Packages. For the latter, you would only choose the IRS 1099 code and IRS 1099 Amount vendors/lines you need to update to include the configuration package.

Reporting

From the 1099 Form Box, you can select Reports and then Vendor 1099 Information. This will only show vendor ledger entries that have 1099 codes and amounts. You’ll enter the date range for the year using the date range filter operator: 1/1/22..12/31/22. 

If an adjustment needs to be entered for a vendor and 1099 type, this can be done from the 1099 Form Box as well.  In the 1099 Form Box, select the 1099 type and then Process then Adjustments. In the adjustments, Enter the Vendor, Year, and adjustment amount.  Amounts entered in the adjustments will not be included in the amounts in the Vendor 1099 Information report, but will be in the total in the actual 1099 report.

For Vendor 1099 NEC (non-employee compensation), navigate to the 1099 Form Boxes, then select Reports and Vendor 1099 NEC. Before printing, ensure that the dates defaulted to the correct range. You’ll have the option to test print, but we recommend just reviewing as a PDF and then printing normally because the number of times you print them is not regulated. When sending the document to print or forms, choose “print.”

Setting up and using the 1096 Form

Once your 1099s are completed and validified, you can move onto any 1096 forms (aka the Annual Summary of Transmittal of US Information Records), which is another IRS form that serves as a summary you include with your other return forms, like the 1099, when transmitting paper tax forms to the IRS via mail. Imagine it as the cover letter or table of contents for the rest of your tax documents.

Business Central 21.1 now includes 1096 form capability. First, ensure your extension is enabled in your environment under Feature Management. Make sure to enable for “All Users” and a setup guide will walk you through the process.

From the 1096 Forms page, select Create forms, enter your desired date range, and the vendor ledger industries posted within this range will be included. You can also make corrections to the form and replace the existing form with the update version – just change the lines you need to, and then select Replace. Note that a regular save will only add the new form, not delete the old one.

After creating, ensure you review for accuracy and Release the form. Upon printing, you’ll need to fill in the Person to Contact details in the request page before you can proceed. At this point, the system will update to indicate that the form was printed, who printed it, and when.

We’re happy to help you navigate your system and business processes. Get in touch with Syvantis if you have questions about year-end closing procedures, 1099s, or 1096s!