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Painful 1099 / Year End Process

I've been using Xero for my business since June. I run a small consulting org, and we deal a great deal with contractors.

I've given each of my contractors a User ID in Xero - and they enter their A/P invoices to the Firm here. This works well, and for me, was far cleaner than giving everyone a FreshBooks account (we tried).

My problem is (or was) - the "year end" reporting from Xero was totally painful for tallying up Payments to Suppliers. First - there are no reports for Suppliers...you can run statements - but these seem to be Accrual based, not cash (what we are). Plus - I've not found a good way to flag which suppliers I should run a 1099 on, and which ones don't need it.

I switched over from QB Mac, and this was easy. They had a 1099 report, and any Vendor you flagged as a '1099' vendor would show up on the report (along with their Tax ID, Address, and annual amounts categorized into the proper 'tax' bucket for the 1099). I turned this over to my accountant...

Not so in Xero. I actually had to go back to QB and run reports there - and then paste into email along with the Xero transactions.

Has anyone figured out a streamlined / efficient way to do year-end or 1099 reporting in Xero?

Thanks

Tags: 1099

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Permalink Reply by Margaret Holmes on January 24, 2011 at 20:50

We don't have this requirement in ZN but I'm guessing your closest report is expenses by contact - it won't help with your tax information.

Send your query to xero and they can add it to their to do file - the more people who request it the quicker it gets actioned.

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Permalink Reply by Steven Heather on January 27, 2011 at 9:53

We had a client who wanted a good old fashioned Accounts payable statement , and the UK Xero support said the same thing, no requirement for this in NZ, but this has been requested.

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Permalink Reply by Brad Forester on January 15, 2012 at 14:38

Another tax year for 1099's from the previous message. And, sadly - still the same awful process for reporting against what I paid (cash basis no less...not easy with the default settings in Xero) to a subset of Vendors.

So - instead of complaining (only)...I'm proposing a solution of how I would do it in Xero. (maybe then someone will listen) :)

Contacts (suppliers) have a field for "1099" or some other generic / non-US field name that is basically a Yes/No field.
Reports - there is a canned Report like "Payments to Suppliers" that captures any disbursement (and associated credits...like PrePayments, etc) to a particular vendor
The Report has the option of being Cash or Accrual
The Report has the option of "Show All Suppliers" or "Show Only '1099' Suppliers"
Run Report, Share with Suppliers via newly-introduced Xero email notification (that should be coming soon...right???) supplier verifies the number
Publish Report, Share with Accountant

Part of the problem is that in the US, your year-end has to be done really quickly so 1099 forms can be distributed to suppliers by Feb 1. It takes the accountant a week to turn around the forms (I'm not his only client) and the suppliers a week to verify the numbers (I'm not their only source of income). Which leaves me holiday time to do the books.

This year was a little better than last, as I knew what to expect...but Xero could make this painless with just the addition of a field on the Vendor and a canned report that should be there anyway.

Xero - you want more US customers? Then, printed checks and 1099's are required to participate. The work-arounds will only suffice for so long, then users will search for other alternatives.

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Permalink Reply by Catherine (Xero) on January 18, 2012 at 4:30

HI Brad - I know we've not yet got to this but we're working on it now. We've just recently launched a specific US version of Xero and we now have people on the ground in the US helping us with things like this type of report that's only needed in the US.

You may have used these couple of reports last year but by consulting the Contact Transactions report and Invoices report you can get the data for all the payments (direct cash and invoice payments) for a contact.

Contact Transactions report (from the Expenses by Contact report)

Accounts Payable Invoices report (from the Contact itself)

Apologies this isn't in place already but it's a top priority.

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Permalink Reply by Catherine (Xero) on January 26, 2012 at 3:41

Actually some progress from my response last week! Today we released a quick export feature in Xero to allow you to get a data dump of supplier payments that you can consult for completion of your 1099 return. This is a quick export to help you complete your 1099 return now, and we'll continue our work on a full 1099 report in Xero. The button will be removed in a couple of months.
Please log into Xero and read the notification that's in your Xero inbox (envelope to the left of your name when you're logged in) to find out where to export your data and how it works.
Please note this only works for organizations/clients who have United States as their Xero business location. Thanks for your patience while we work on a more complete solution.

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Permalink Reply by Marc on January 26, 2012 at 17:10

Hi Catherine,

In the notification we got, it says "The export is for a fixed time period (1 January – 31 December 2011) and contains all cash payments and refunds (direct payments or from invoices and credit notes) for all contacts by account."

Emphasis added by me! But I don't think this is the case. Here is an example:

We paid a contractor by check, the check got returned to us and our account was credited. We then wrote the contractor another check. However your "1099 report" shows the total we paid the contractor, not the net. If we reported the total you show, we would be reporting double the amount we should have.

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Permalink Reply by Catherine (Xero) on January 26, 2012 at 18:05

Hi Marc - nice to 'see' you! Oh sorry about that - just fixed it. Missed the scenario where a refund is not done via a credit note. When we do the 1099 report properly instead of a quick data dump (that you do have to manually double-check I'm sorry) we know that Contacts will have to be tagged by you as a supplier because right now the flow of money in and out is just against a Contact so money coming in might not always be for a supplier.

Anyway, we have tweaked the export - sorry about that - we wanted something quick to help so despite this hiccup I hope it's more useful than doing this manually. Please take another look and shout out if it's not right.

We recommend that you still take a look at the data that's exported anyway just to make sure it's what you expect.

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Permalink Reply by Marc on January 26, 2012 at 18:53

I think something is wrong. The numbers for a bunch of contacts now seem off. Some sort if double counting going on. Sorry, I can't figure out what the pattern is.

P.S. Hi! Hope all is well. Good to see you too!