Direct deposit for vendors gives you the ability to send direct deposits to 1099 independent contractors in QuickBooks Desktop Payroll.
Note: In order for Intuit to meet Federal and State compliance requirements on a consistent basis across all of our offerings, the Intuit Direct Deposit service cannot be used to pay bills or make payments to individuals or entities who are not independent contractors.
Information about 1099 independent contractors:
What is an independent contractor? Use the resources to determine if individual providing services is an employee or independent contractor:
- IRS.gov: Independent Contractor Defined
- IRS.gov: Independent Contractor (Self-Employed) or Employee?
- Intuit Guide to Hiring: Classify Workers Correctly: independent contractors vs. Employees
If you need to set your file up to create 1099-MISC forms and mark your vendors eligible for 1099s, see, Set up a vendor and print 1099/1096 forms for additional details.
Step 1. Prepare the following before signing up
- The vendor must be a 1099 independent contractor.
- QuickBooks Desktop Payroll Basic, Standard & Enhanced customers must have latest release of QuickBooks Desktop installed, and must sign up for the Direct Deposit service.
- QuickBooks Desktop Payroll Assisted customers must have the latest release of QuickBooks Desktop installed.
Step 2. Sign up direct deposit for independent contractors
Once you have direct deposit activated for paying employees, you can activate it for paying 1099 vendors.
Step 3. Add direct deposit information to your independent contractors
Before you can pay 1099 vendors by direct deposit, you need to notify them and collect their bank account information. You can use the same sample forms used for employees.
- Open the Vendor Center.
- Double-click the vendor you want to add direct deposit to.
- Choose the Additional Info tab and select the Direct Deposit button.
- Select the Use Direct Deposit for: [Vendor Name] box. Enter bank routing and account number, bank name, and account type. Split direct deposit payment is not available for independent contractors. Note: If QuickBooks Desktop is rejecting the Bank Account information when entered, it is important to verify the bank account information.
- Have your vendor call their banking institution to validate that the bank account number and routing number are valid for ACH transaction.
- Bank Account should be a U.S. account.
- Verify the vendor name set-up in QuickBooks Desktop. Do not put special characters (such as dashes or hyphens) which can cause the sign-up to fail.
- Select Send confirmation direct deposits to [email address] if you would like Intuit to send an email confirming payment.If no email address is shown or if the email address is wrong. You can add or update the email address by selecting the Address Info tab. Intuit will send an email to the email address entered, two days before payment will arrive in the independent contractor's bank account. Included in the email:
- Your company name
- The amount of payment
- The date the payment will arrive in the independent contractor's bank account (the date shown on the independent contractor's check in the check register)
- The last four digits of the independent contractor bank account number
- Enter your direct deposit pin when prompted.
Edit an independent contractor's direct deposit information
You can update the vendor's bank account information on the same page where you set it up.
- Enter your direct deposit PIN when prompted.
Unlike changing the direct deposit account for employees, with Independent Contractors, even though you change the direct deposit bank account and send to Intuit, the account is not updated until you create a payment for the independent contractors and send.
Remove direct deposit permanently from an independent contractor's profile
If you no longer want to pay a vendor for direct deposit, you can remove them from the set up.
- Select Vendors and choose Vendor Center.
- Double-click the name of the vendor whose profile you want to edit.
- Select Additional Info tab.
- Select Direct Deposit button.
- Select to clear the box Use Direct Deposit for: this vendor.