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Level 2

Can I use QBO Payroll Core for independent contractors only?

Hello,

 

I set up QBO Payroll Core for my client under the assumption (from the information I found online) that I could use it to set up direct deposit for independent contractors only. My client has no employees. Now that I'm trying to pay one of her contractors, it's asking me to set up an employee first, and I can't seem to bypass it, because that's where you set up your bank account to get the money drawn from. 

 

Is there any way I can use Payroll for contractors only? If not, is there some sort of placeholder I could use for an "employee" to fill out the W-4? I thought about putting the owner's info in, but I'm not sure if that gets reported to the IRS? She doesn't pay herself often and I want to keep it as just draws for her.

 

Should I not have the QB Payroll at all for her and use a different method? She was using Venmo prior and I don't want to go back to that!

 

Thank you!

Solved
Best answer April 07, 2020

Best Answers
Highlighted
Level 2

Can I use QBO Payroll Core for independent contractors only?

Hello, so I did call QuickBooks support, and they said I do need to add an employee with a W-4. They also mentioned that they didn't even need the number you provided. I'm not sure what information is 100% accurate, but I'm just going to add the owner as the employee.

 

So you can use QBO Payroll for only contractors, but you have to add an employee, even if you don't pay them. This can be the owner or whomever you choose.

 

I do find it frustrating that I couldn't get straight information on this right away, and there was a lot of confusion. I don't think it should be necessary to add an employee in order to use the QBO Payroll, if it's advertised that you can use it for contractors only. 

View solution in original post

8 Comments
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QuickBooks Team

Can I use QBO Payroll Core for independent contractors only?

I appreciate the complete details you've provided, @backbonebookkeeping.

 

Yes, you can use QuickBooks for contractors only. You can set your direct deposit information through the contractor setup. I can guide you how to do it.

  1. Go to the Workers menu.
  2. Select the Contractors tab.
  3. Under the price, select Get Started.
  4. Choose Set up direct deposit.
  5. Pick Add bank.
  6. Enter your banking credentials or bank account information.

Once completed, you'll have to complete a test transaction to verify the bank account on file. However, if you already connected your bank with QuickBooks, you will not see this prompt.Review direct deposit bank credentials in QuickBooks Online

 

You can read through this article for more detailed information: Contractor direct deposit.

 

Let us know if you have other questions. I'm always here to help.

Highlighted
Level 2

Can I use QBO Payroll Core for independent contractors only?

Thank you for your response! I am still stuck, though, after trying to follow your steps. 

 

I have already set up one contractor with their own bank info. I'm not sure if the directions you gave apply to me, or only if I haven't set up any contractors. If it does apply to me, I'm not sure what it means in Step 3. "Under the price, select Get Started." I do not see that option. 

 

In the contractors tab, all I see is a search bar, "Prepare 1099s," "Add a contractor," and the contractor's profile. Maybe this means that I've already set up the withdraw account? I don't remember doing that though, and I haven't been prompted for a test transaction like you said. 

 

When I click on "Pay with direct deposit" on the contractor's profile, I get an error message saying "Something's not quite right- to make direct deposits with QB, add your company's bank account info. Enter it by going to Preferences (with link) and selecting Company Bank Account." I click on the link, and it says I need to finish my payroll set up. I click on "Get started with payroll," and it prompts me to add an employee which I don't want to do. It's an endless loop.

 

If it means anything, I'm on the free trial of QBO Payroll Core.

 

Please let me know, I really need to get this figured out asap! Thank you.

Highlighted
QuickBooks Team

Can I use QBO Payroll Core for independent contractors only?

Hi there, backbonebookkeeping.


We have an open ticket about the error you received when activating the direct deposit (contractor). Our engineers are all hands on deck getting this feature working back to normal.


In the meantime, we’ll have to add your company to the notification list. This is to ensure you receive email updates regarding the resolution status.


I encourage contacting our QBO Care Team since they can add the account information in a secure environment. Signing up to the list can help determine the number of affected users, and our engineers will use this data to implement the resolution.


Here’s how to reach them:

 

  1. Go to the Help menu to open the Search window.
  2. From there, scroll down to click the Contact us link.
  3. Type the issue/topic in the field box and then hit the Let’s talk button.
  4. Select how you want to reach out to our support team: Chat or Get a callback.
  5. To expedite the process, make sure to give the following number: INV- 44445.

Rest assured, I’ll update this thread once the permanent resolution is available.


For future reference, let me share the Contractor direct deposit guide. It provides an overview of the setup process and as well as answers to frequently asked questions.


Thanks for your patience while we’re working through this. Reach out to me if you have any other questions. I’ll be right here to answer them for you.

Highlighted
Level 2

Can I use QBO Payroll Core for independent contractors only?

Hello, so I did call QuickBooks support, and they said I do need to add an employee with a W-4. They also mentioned that they didn't even need the number you provided. I'm not sure what information is 100% accurate, but I'm just going to add the owner as the employee.

 

So you can use QBO Payroll for only contractors, but you have to add an employee, even if you don't pay them. This can be the owner or whomever you choose.

 

I do find it frustrating that I couldn't get straight information on this right away, and there was a lot of confusion. I don't think it should be necessary to add an employee in order to use the QBO Payroll, if it's advertised that you can use it for contractors only. 

View solution in original post

Highlighted
Level 1

Can I use QBO Payroll Core for independent contractors only?

I have the same issue and wanted to find out if there was an updated answer.  Fundamentally the answer they provided is wrong in my opinion and is merely a way to get through the process.  Bringing someone in as an "employee" when they are really a contractor is an issue.  

 

I would like to get this set up as well but cannot get pass this.  Can I ask how you set up the "employee"?

Highlighted
QuickBooks Team
QuickBooks Team

Can I use QBO Payroll Core for independent contractors only?

Thanks for bringing this one to our attention. I'm here to clear things out for you, rener1014.

 

We can set up and pay contractors through direct deposit (DD). The DD features only work if you havan an active payroll subscription, even if you don’t run payroll for active W-2 employees. QuickBooks will advise you to set up an employee first because that's where you set up your bank account to get the money drawn from. 

 

To set up an employee, just follow the steps below: 

  1. Go to Payroll on the left side menu.
  2. Choose Employees.
  3. Click the Add an employee button.
  4. Enter the employee's info, and press Done.

For more details about this one, see Add or edit an employee in the Online Payroll article.  Once done, add the new contractor profile on the Contractors page in QuickBooks Online (QBO). Let me show you how:

  1. Go to Payroll on the left side menu.
  2. Choose Contractors.
  3. Tap the Add a contractor button. 
  4. Enter the details in Name and Email fields.
  5. Press Add contractor.

Then, you can pay the contractor with a direct deposit in QBO or Intuit Payroll.

 

Just in case you'll encounter an error message "Something's not quite right with your account" when you're trying to set up payroll and enter bank information on Payroll Core, then we have an ongoing issue about this one. Our engineers are still working on the permanent fix.

 

In this case, please reach out to our Payroll Support Team (just follow the steps provided by my colleague). They'll pull up your account in a secure environment and add you to the list of affected users. Just provide them the INV- 44445 and they'll send you an email notification once there's an update of this case.

 

Visit our Payroll page for more insights about processing your payroll. 

 

You can always count on me if you need anything else in QBO. Just leave a comment below and I'll be here to answer them. Take care always. 

Highlighted
Level 1

Can I use QBO Payroll Core for independent contractors only?

Thank you for the response, however setting up an employee first doesn't seem to make sense in this situation as the organization is a non-profit with the workforce being either volunteers or contractors.   The organization may have employees down the road but at this time there are none.

 

It sounds like this setup step is required in order to set up direct deposit for contractors and that the employee would be a "dummy" employee.  Does Quickbooks provide a step-by-step guide on how to set up a "dummy" employee as it asks for more than just their general information.  Also in your set up it says to add workers' comp policy.  How does one get through that?

Highlighted
Moderator

Can I use QBO Payroll Core for independent contractors only?

Hello again, @rener1014. I appreciate you getting back and providing detailed information about your concern. 

 

Using QuickBooks Payroll, you can pay your contractors even if you don't run payroll for active W-2 employees as long as you have an active payroll subscription with Intuit. 

 

Before doing so, you'll need first to set up your contractor's profile by adding them as a vendor. Here's how:

  1. Go to the Workers or Payroll menu at the left. 
  2. Choose Contractors tab. 
  3. Tap Add a contractor
  4. Enter their info which you can find on their W-9. 
  5. Hit Add contractor

Once finish, start tracking their payments by following the steps below:

  1. In the left menu, click the Expenses.
  2. Tap Vendors.
  3. Choose the vendor you want to track and open their profile.
  4. Hit Edit.
  5. Select and check the Track payments for 1099 checkbox.

When done, you can now set up direct deposit payments. Ensure that contractors bank info is enter so you can pay them through direct deposit.

 

To learn more about paying your contractors via direct deposit, see this article: Pay a contractor with direct deposit.

 

Keep me posted if you have further questions about this process. I'm here to offer additional help. Have a nice day.

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