Pay your 1099 contractor expenses

Add a contractor's expense bill to Xero and pay it.

Before you start

Add contractor's bill

  1. In the Accounts menu, select Purchases.
  2. In the New menu, select Bill.

    Image showing new bill link.

  3. In the From field, add the contractor's name.
  4. In the Account field, select the expense account you'll use to pay the contractor.
  5. Complete the rest of the bill according to the contractor's invoice.
  6. Click Approve.
  7. Under Make a payment, check the Amount Paid and fill out the remaining fields.
  8. Click Add Payment.

When you pay the contractor, make the payment through a bank account. Xero excludes payments made by credit card or third-party services (eg PayPal) from 1099 forms. It also excludes expense claims.

You can also record a payment to a 1099 contractor with a spend money transaction.

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