Vendors vs Contractors
Deviem_
Member Posts: 2
I don't know if I'm even in the right place here. I just started working with this small company, and my boss needed some organization so I chose this platform after reading reviews. I AM NEW TO BUSINESSES AND THEIR TAXES AND LEARNING AS I GO, but I'm trying to help her as much as possible.
Now, I have a vendor to enter and I don't want to classify wrong so things will be easier at tax time. This is a company (a vendor) she has an account with who is selling her a product to then sell to her clients. They aren't actually doing contract work (as mentioned in the 1099-MISC classification), so I don't know whether to classify them as contractors under vendors, or just enter the invoices she's received singularly under the products and services section.
... Please help me.
Comments
@Deviem_ ,
The 1099 classification is only for reporting payments to unincorporated entities. It really does not matter if you mix vendors so long as you able to properly report payments to the IRS. In your case it sounds like you are purchasing products and reselling. I would classify them as Purchases on the income statement. To make it easier some businesses might set up 2 accounts and classify non-1099 payments in one and 1099 payments in the other. Makes it easier to run a report for the 1099 account and sort by vendor to do reporting.
Great advice! Thank you @Mikeg