How To Pay Contractors In QuickBooks Online: Quick Guide

Mike Renaldi

QuickBooks Online (QBO) is a popular accounting software. It allows businesses to manage their finances, track expenses, and pay contractors. It is an efficient way to stay on top of your finances while ensuring that everyone you pay gets paid the right way.

In this article, we’ll discuss how to make QuickBooks contractor payments. You'll also learn how to use other QuickBooks payment and tax filing services.

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Table of contents

How To Pay Contractors In QuickBooks Online

You can pay contractors with direct deposit in QuickBooks Online. You can do this through Payroll or Contractor Payments. You can also make payments without QuickBooks Online or through QuickBooks Desktop Payroll. But this is the only option for QuickBooks Online users.

Before we get into how to do it, it’s important to note that these services are only available at an extra cost. We’ll describe those costs later.

Here’s how to direct deposit to your contractors through QuickBooks Online. This is through Payroll or Contractor Payments: ¹

  1. Set up profiles for your contractors
  2. Add your company’s bank details to your profile
  3. Input your contractor’s direct deposit info
  4. Go to “Expenses”
  5. Select “Contractors”
  6. Select “Pay contractors”
  7. Ensure the bank account you’re paying from is the right one
  8. Select the “Pay date”
  9. Select “Direct deposit” under “Pay method”
  10. Select an expense category under the “Account” dropdown menu. This should be what you use to track contractor payments. You should base this decision on your accountant's advice.
  11. Fill out the form with the amount, description, etc.
  12. Select “Preview contractor pay”
  13. Select “Submit contractor pay”
  14. Select “Done”

Again, using this service requires a paid plan. QuickBooks currently offers 50% off for the first three months or a 30-day free trial. But we’ve listed the full prices here. These are the options:

  • Contractor Payments - $15/month + $2/contractor over 20 contractors/month
  • Contractor Payments + Simple Start - $45/month + $2/contractor over 20 contractors/month
  • QuickBooks Payroll Core - $45/month + $6/employee or contractor/month
  • Payroll Core + Simple Start - $75/month + $6/employee or contractor/month

The first two options are only for paying contractors. The last two options allow you to pay contractors and employees.²

Looking to save on contractor payments while keeping your books up to date? Connect your Wise and QuickBooks account:

How To Use QuickBooks Direct Deposit For Vendors via QuickBooks Desktop

You can also pay your vendors from QuickBooks via direct deposit. You can do this using QuickBooks Online Payroll services. Since we’ve described that process above, we’ll go through the process on QuickBooks Desktop here.

Here are the steps to set up direct deposit: ³

  1. Ensure your vendor is a 1099 independent contractor
  2. Set up or make sure you have an active QuickBooks Desktop Payroll account
  3. Select “Vendors” in the top menu of QuickBooks Desktop
  4. Open the “Vendor Center”
  5. Double-click your vendor of choice
  6. The “Edit Vendor” window should open
  7. Choose the “Additional Info” tab
  8. Select “Direct Deposit”
  9. “Payroll Service Account Information” should open. If you’re a Desktop Payroll Assisted user, skip to step 11
  10. Go to “Direct Deposit” and select “Activate” under it
  11. Enter your direct deposit pin
  12. Select “Continue”
  13. Follow the instructions shown onscreen until you get to the “Confirmation” screen
  14. If all the information is correct, confirm

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Here's how to add direct deposit information to your independent contractors’ profiles: ³

  1. Click “Vendors” in the top menu of your QuickBooks Desktop account
  2. Open the “Vendor Center”
  3. Double-click the name of your vendor of choice
  4. Select the “Additional Info” tab
  5. Click “Direct Deposit”
  6. Choose the box that says “Use Direct Deposit for: [Vendor Name]”
  7. Enter the bank account information of your vendor
  8. Select “Send confirmation direct deposits to [email address]”. (optional step if you’d like Intuit to send a payment confirmation email)
  9. Enter your direct deposit PIN when prompted

QuickBooks currently recommends that all their users switch to QuickBooks Online’s services. But QuickBooks Desktop Payroll is still available. Like Online, it requires a paid plan. But there are only two payment options for QuickBooks Desktop:

  • Monthly Billing - $55/month + $6/employee/month
  • Annual Billing - $550/year + $6/employee/month

Choosing the annual billing option results in annual savings of $110. But this service is more intended for employee payment. Most people use the QuickBooks Online Payroll system for contractor payment.⁴

How To Do QuickBooks Contractor Payroll

Using QuickBooks Payroll for contractors and vendors is easy to do. We've described the process in detail above. Choose the option from the headings above that fits your QuickBooks preference. There is either QuickBooks Online or Desktop.

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How To Pay A 1099 Employee In QuickBooks

It is possible topay a 1099 employee in QuickBooks. But it’s important to note that the traditional definition of an employee may not be who we’re talking about here. A 1099 employee is sometimes used as another name for a vendor or contractor.

QuickBooks Online and Desktop Payroll services help you e-file 1099 forms. They may also ask that whoever you are paying is a 1099 worker. This means you can usually use QuickBooks Desktop or Online Payroll to pay a 1099 employee.

Here is what QuickBooks has to say about paying 1099 employees. We'll start with how to set up your employee as a contractor for direct deposit:

  1. Open the “Vendor Center” in your QuickBooks account
  2. Double-click your vendor of choice
  3. Select the “Additional Info” tab
  4. Click the “Direct Deposit” button
  5. Choose the box that says “Use Direct Deposit for: [Vendor Name]
  6. Enter the vendor’s bank information
  7. Select “Send confirmation direct deposits to [email address]”. (optional step if you’d like Intuit to send a payment confirmation email)

And here’s how to pay 1099 employees using direct deposit:

  1. Go to the “Banking” menu in your QuickBooks account
  2. Select “Write Checks”
  3. Fill in all necessary information
  4. Check the “Pay Online” check box
  5. Click “Save & Close”
  6. The “Confirmation and Next Steps” window should open
  7. Select “Send to Intuit”
  8. The “Send/Receive” window should open
  9. Click “Send”
  10. Enter your direct deposit PIN

Looking to save on contractor payments while keeping your books up to date? Connect your Wise and QuickBooks account:

Forms And Taxes For 1099 Employees In QuickBooks

QuickBooks offers quite a few tax forms for employees. They do this with their tax kits for small businesses. These include:

  • W-2
  • Blank W-2
  • 1099-NEC
  • 1099-MISC
  • W-3
  • 1096

Working with 1099 employees means you must file the two 1099 forms listed here. Let’s look a little more in-depth at what these forms mean and what they need. You'll also learn how much QuickBooks charges for their services.

You can use the 1099-NEC tax form “to report payments of $600 or more to non-employees (contractors)”. This means that this form applies to most 1099 employees. QuickBooks offers pre-printed kits that contain

  • the tax forms (with three tax forms per page)
  • four 1096 tax forms
  • compatible double window envelopes

These kits start at $58.99. The price depends on:

  • your state
  • the amount of kits you’re purchasing
  • whether you need to file City Income Tax

You can learn more about this kit here.⁶

You can use the 1099-MISC tax form “to report payments of $600 or more for

  • rents
  • royalties
  • medical and health care payments
  • gross proceeds paid to attorneys”

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QuickBooks offers pre-printed kits that contain:

  • the tax forms (with two tax forms per page)
  • four 1096 tax forms
  • compatible double-window envelopes

These kits start at $58.99. The price depends on

  • your state
  • the amount of kits you’re purchasing
  • whether you need to file City Income Tax

You can learn more about this kit here.⁶

There are several other 1099 forms for various circumstances. Here is what they are and what you can use them for:

  • 1099-A - acquisition or abandonment of secured property
  • 1099-B - proceeds from broker and barter exchange transactions
  • 1099-C - cancellation of debt
  • 1099-CAP - changes in corporate control and capital structure
  • 1099-G - government payments
  • 1099-K - debit and credit card transactions
  • 1099-R - distributions from retirement and IRAs
  • 1099-S - proceeds from real estate transactions
  • 1099-DIV - interest income, dividends, tax refunds, or unemployment benefits

QuickBooks Payroll and Contractor Payments allow users to e-file unlimited 1099 forms. It’s unclear which 1099 forms QuickBooks includes. But they make it a point to mention 1099-NEC and 1099-MISC.⁷

Pay Employees With BatchTransfer

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BatchTransfer’s core strengths for payroll:

What sets BatchTransfer apart is its commitment to providing the mid-market rate for currency conversions. This means that businesses get a fair and transparent deal when making international payments.

Another perk of using BatchTransfer for international payroll is its extensive coverage of over countries and currencies! With features like automatic payment scheduling and API integration, small businesses can streamline their payroll process, freeing up valuable time and resources for other important tasks.

  • How can businesses use BatchTransfer for payroll?: Businesses can send up to 1000 payments with a single click with BatchTransfer. US-based business can access BatchTransfer at no extra charge.

  • Connect to your accounting software: You can easily manage and reconcile your mass payments through accounting software integrations such as QuickBooks or Xero.

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Learn More: Best Free Payroll Software


**Sources:**
  1. QuickBooks
  2. QuickBooks
  3. QuickBooks
  4. QuickBooks
  5. QuickBooks
  6. QuickBooks
  7. QuickBooks
  8. Wise TrustPilot



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This publication is provided for general information purposes and does not constitute legal, tax or other professional advice from Wise Payments Limited or its subsidiaries and its affiliates, and it is not intended as a substitute for obtaining advice from a financial advisor or any other professional.

We make no representations, warranties or guarantees, whether expressed or implied, that the content in the publication is accurate, complete or up to date.

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