This probably sounds like a very common scenario that you have run into:
A company hires a contractor or freelancer to work for them - it could be a management consultant, someone who paints the exterior of the office building, or a landscaping professional - in any case, these individuals need to be set up as a 1099 Vendor in your ERP system.
Thankfully, Microsoft Dynamics 365 for Finance and Operations (F&O) offers functionality to easily track 1099 Vendors, manage the W-9 forms from these individuals, and print the 1099 statements annually.
When creating a 1099 Vendor in Microsoft Dynamics 365 F&O, navigate to Accounts payable > Vendors > All vendors.
💡QUICK TIP: The Vendor list can also be reached by navigating to Procurement and sourcing > Vendors > All vendors.
Now, from the All vendors list page, click the New button which will start a new Vendor record.
If the 1099 Vendor is an individual, you can set the Vendor type as Person instead of Organization. The organization is the default, so this field will have to be selected manually. By doing this, it allows you to filter by Vendor type and enter first and last names instead of one field for a Vendor name.
The only required fields for a Vendor are Name, Group, and Currency. You may notice that the First, Middle, and Last name fields are all showing as required. Once one of them has content, the others will no longer show as required.
Other beneficial fields to have populated on the Vendor record include:
Anything beyond these fields and the fields specific to the 1099 in the next section are additional and while they provide value, are not necessarily required.
As you scroll through the FastTabs on a Vendor record, there is a FastTab called Tax 1099. This is where all the 1099 information lives for a contractor.
In the first section called Tax 1099 options, there are three flags.
The Report 1099 flag, when set to Yes, will show all transactions for that Vendor in 1099 reports.
W-9 Received is a check that allows users to filter on Vendors where a 1099 has not been received.
Check for W-9 will alert users to check for a W-9, but only if the parameter Check for W-9 form is selected in Accounts payable parameters.
Once that parameter is enabled, and the Check for W-9 field is selected on the Vendor record, an alert will let the user know to ask the vendor for a W-9 at invoicing.
Other fields on the Tax 1099 FastTab on the Vendor include:
Creating a 1099 Vendor is fairly straightforward, and if executed properly, will keep an organization in compliance with tax laws and regulations surrounding payments for contractors.
In the Part 2, I will specifically review the reports available for 1099 reporting and additional information on creating 1099 payments.
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