If you’re based in the US and use contractors, it’s likely that you’ll need to report the income you pay to them using a Form 1099. Fortunately, Xero makes it easy to prepare one of these forms.

Xero generates pretty pulls the tax numbers from the transactions you put in Xero so it’s extremely important to input in your transactions correctly.

Here’s how you can go about it preparing and filing your Form 1099 with Xero:

1. In Contacts, create a Group of Contractors who’ll need to be reported by Form 1099. Don’t know how to group contacts? Check out this guide on managing contacts in Xero.
2. Go to Reports > All Reports > 1099 Report and you’ll be prompted to set up
3. Click “Set Up Rules” and select the contractors Contact Group in the “Payments To” drop-down.
4. In “All Accounts” in the “Paid From” drop down field, choose “Box 7: Non-Employee Compensation” in the “Report As” field.
5. Click “Add Rule” - you may need to speak to your tax accountant re: this to make sure you’re meeting your requirements. When satisfied, click “Save”.
6. If there is any Missing Details, edit the form accordingly and “Save” when done.
7. Review your report by going to Reports > All Reports > 1099 Report and click on an individual contact.
8. Untick transactions that are not needed in the 1099 Report and “Save”.
9. Click the green “Use e-File Services” and “Track 1099” to make and file your 1099 Report Online!

And you’re done!