How can I pay my contractors by direct deposit - I don't have employees in the company, just contractors

Imho, If you don't have any employee, you don't need to use Online Payroll to pay your contractors. You can signup a separate Melio account for free to integrate with QBO and pay your contractors for free by ACH.

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Hi there! You got me here to help you set up direct deposit for your contractors.

You'll need to have a company bank account connected to use direct deposit. Next, turn on the contractor's direct deposit. Here are the steps:

1. Select Check it out above the list of your contractors.
2. Select Turn on direct deposit.

Lastly, you can add the contractor's bank account information. Please follow the steps below:

1. Navigate the Payroll menu and select Contractors.
2. For a new contractor, select Add a contractor or select the existing contractor to add or edit bank info.
3. Select Bank account.
4. Follow on-screen instructions.
5. Select Save.

The steps are sure to help you set up your contractor's direct deposit in no time.

For additional reference about paying contractors with Direct Deposit, see the following links:

• Pay a contractor with direct deposit
• Pay vendors using Direct Deposit

Please keep me updated if you require any additional assistance with payroll management. I'd be delighted to assist. Keep yourself safe!

So do you just set up,your contractors as vendors then and pay them that way?

Yes, @KEI construction. When paying your contractors in QuickBooks Online (QBO), we must set them up as vendors. Let me shed some light on this question.

Contractors are independent workers a company hires to work on specific business tasks within a defined scope and timeline. Their objective is to perform the jobs given to them.

On the other hand, a vendor is a person who supplies goods and services to a company. Their main goal is to engage in the sale of their products to their consumers.

Therefore, when paying contractors in QBO, they should be treated as vendors because they sell their services by completing specific tasks, similar to how vendors market their products. At the same time, setting them up this way will help you manage and track their 1099s efficiently. 

For reference, visit this article: Set up contractors and track them for 1099s.

If you want to learn more about paying your contractors using direct deposit, please check out this article: Set up and manage direct deposit for your contractors.

You can utilize the Reply button if you have other questions about paying contractors, feel free to ask. I'm here to help.