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Pay a contractor with direct deposit

SOLVEDby QuickBooksQuickBooks Online Payroll430Updated 3 days ago

Learn how to pay your contractors using direct deposit in QuickBooks Payroll.

With QuickBooks Payroll, you can use direct deposit to pay your contractors. This lets you put their money straight into their bank accounts so they don't have to cash a check.

Here's how to set up and create direct deposits for your contractors.

Your steps depend on which product you have.

Note: Not sure which payroll service you have? Here's how to find your payroll service.
Note: If you don't want to use direct deposit, here's how to pay your contractors with paper checks.

Tip: You can also use direct deposit to pay open bills with your contractors in QuickBooks Online. This is outside your payroll system. QuickBooks tracks contractor payments for 1099- MISC reporting.

Step 1: Add your contractor

Before you can pay your contractor, you need to set up their profile. Check out Set up contractors and track them for 1099s in QuickBooks to learn more.

Step 2: Set up direct deposit

Once your contractors have profiles, make sure your company’s payroll is set up for direct deposit payments.

Also make sure that you’ve entered your contractor’s bank account info so you can pay them through direct deposit.

Step 3: Create contractor direct deposit payments

Now you're ready to send a direct deposit to your contractor. Follow the steps for the payroll product you use.

To pay an independent contractor using direct deposit:

  1. Go to the Payroll menu, then select Contractors.
  2. Next to the contractor’s name, select the ▼ dropdown and then Pay with direct deposit.
  3. Enter the amount for the direct deposit.
  4. Select the expense account you use to track paychecks in QuickBooks. Note: This is the expense account on your chart of accounts where QuickBooks records the expense. It's not the bank account.
  5. Select Save & Send or Save & New.

You’ll get a message that your direct deposits were sent.

Before paying your contractor, make sure you update to the latest version of QuickBooks Desktop.

When you're ready to pay an independent contractor using direct deposit:

  1. Select Banking, then select Write Checks to start the direct deposit.
  2. Select the Bank Account ▼ dropdown and select the checking account you use to pay contractors.
  3. Select the Pay to the Order of ▼ dropdown and select the contractor.
  4. Select the Date field and enter the date you want to pay the contractor. Important: To pay by direct deposit, the pay date must be at least two business days in the future. If a date is less than two business days in the future, QuickBooks automatically chooses the soonest available date to pay via direct deposit.
  5. Enter the direct deposit amount in the $ field.
  6. Select the Expenses tab and select the related expense account.
  7. Make sure the Pay Online checkbox is checked. Note: If you’ve entered bank account information for your contractor, QuickBooks selects the Online Payment checkbox box.
  8. Select Save & Close. This opens the Confirmation and Next Steps window.
  9. Select Send to Intuit to open the Send/Receive window. Note: If you close the window on accident, go to the Employees menu and select Send Payroll Data.
  10. Select Send and enter your direct deposit PIN.

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