How to setup Contractors in Pocket for 1099 reporting

1. Paying your Contractors

   We advise our customers to avoid using Venmo for business purposes and instead opt for more reliable and business-friendly options like Zelle or ACH for domestic payouts. Here's why:

   Why Not Use Venmo for Business:

   • Venmo was designed for personal use: It is primarily a peer-to-peer (P2P) payment service, not meant for business transactions.
   • Lack of transaction details: Venmo doesn’t provide sufficient detail about each transaction, which can cause confusion for bookkeeping and tax reporting.

   • Not designed for professional record-keeping: Venmo lacks features businesses need for maintaining proper financial records.

     Recommended Alternatives: Zelle and ACH

   1. Zelle:
      • Quick transfers: Payments are processed instantly.
      • Easier tracking: Allows better integration with bank accounts and easier transaction identification.
      • No fees: Zelle typically doesn’t charge fees for transactions between bank accounts.
      • Vendor Name and Keywords: You can set up rules to categorize payments, improving record-keeping and reducing errors.
   2. ACH (Automated Clearing House):
      • Secure and reliable: ACH is a highly trusted and widely used system for business payments.
      • More detailed records: ACH transactions provide better documentation, making it easier to track and reconcile payments.
      • Supports larger payments: ACH allows for larger payouts compared to Venmo.
      • Vendor name and keyword rules: Easily set up rules for categorizing transactions and improving organization.
2. How to create a vendor rule using Vendor name in Pocket.
   1. Go to Vendor rules
   2. Click Add new rule
   3. Click Vendor name - Input here the name of your Contractor
   4. Click Chart of account and choose “Contract Labor”
   5. Click transaction type click “Outflow”

   6. Click Save

      

3. How to create a vendor rule using keyword in Pocket.
   1. Go to Vendor rules
   2. Click Add new rule
   3. Click Contains Keyword- Input here the name of your Contractor
   4. Click Chart of account and choose “Contract Labor”
   5. Click transaction type click “Outflow”

   6. Then click Save

By following this guide you can streamline the process of tracking contractor payments and ensure compliance with IRS requirements for 1099 reporting.