In the U.S., a 1099 form is used to provide information to the IRS on non-corporate vendors that are paid more than $600. The biggest problem with this process is getting a Tax ID number from these vendors, usually this involves a W-9 form. Often, companies don’t get a Tax ID number when they setup the vendor and have to go back at year end and try to get one. Good luck making this happen in the real world.
The only way to make this process work smoothly is if the AP department enforces a strict, no pay policy without a W-9 on file. It’s brutal but it does get W-9’s in the door. Here’s how Dynamics GP can facilitate this process by preventing payments to vendors without a Tax ID in GP.
- Setup every new vendor on hold by checking the Hold box next to the Vendor ID on the Vendor Maintenance window. (Cards->Payables->Vendor)
- Open the Options window on Vendor Maintenance with the options button. (Cards->Payables->Vendor, Option)
- In the Tax ID field of Vendor Maintenance Options enter “Need Tax ID”
- Enter the rest of the vendor info and save it.
Once a W-9 with an ID is received, enter the tax id in the tax id field and remove the hold.
Use a Smartlist at the time of each AP run to review vendors on hold due to missing tax ID information. This process also makes it very easy for AP personnel to deal with vendor inquiries. If the vendor’s payments are on hold due to missing Tax ID information, tell them when they call. It’s amazing how fast that information arrives.