Paying non-1099 vendors with direct deposit

Hi there, @Cody4533.

Allow me to provide some more information about vendor direct deposits.

When you use vendor direct deposit, you're paying the vendor and recording the transactions to calculate their 1099s. This means you'll want to pay the vendor that doesn't have 1099 using another form of direct deposit. You'll also want to send the payroll to Intuit before 5 p.m. Pacific Time, two federal banking days before the paycheck date to ensure it processes on time. You can check out this article for more information: Send payroll and direct deposit paychecks.

Feel free to drop a line below if you have any other questions. I'm always here to help.

Thank you for your response Anna.I use direct deposit for employees' payroll. Is ACH a payment option since Intuit does not allow direct deposits to non-1099 vendors? Due to the COVID-19 pandemic, some of my non-1099 vendors would prefer to get paid electronically so they don't have to rely on the mail and the going to the bank to deposit their monthly check. 

Good Evening, @Cody4533. 

Thanks for reaching back out to the Community. There are two options available for you to pay your vendor(s). Either by check or credit card. Here's how to get there: 

1. Go to the Vendors menu. 
2. Choose Pay Bills. 
3. Check the bills you'd like to pay. 
4. In the payment section, press the Method drop-down arrow and select either Check or Credit Card. 
5. Once you're finished, hit Pay Selected Bills. 

Here are two additional links that could help you out if you have a 1099 Vendor that you'd like to pay with direct deposit:

• Pay bills for vendors through Direct Deposit

• Paying Independent Contractors using Direct Deposit

Should you need any further assistance, don't hesitate to contact me. I'm always here to lend a helping hand. Have a great week ahead!

I have non-1099 vendors whom I am now paying via bank domestic wire which incurs hefty bank charges at my side as well as my vendors’ bank. I do not have ACH with my bank now. Can I use QBO direct deposit to pay these non-1099 vendors?

Hello, @user04858.

Yes, you can use direct deposit to pay your mom-1099 vendors. Here are some factors you need to consider:

• The direct deposit set-up is complete.

• You have 1 bank account assigned to use for all DD transactions only. The use of different funding bank accounts is not possible.

• You have an active subscription to any version of QuickBooks Online Payroll. If you have inactive W-2 employees or no employees at all, you still need to have a subscription to pay contractors with direct deposit.

Here's how to pay your vendors:

1. Go to the Workers menu and select Contractors.
2. Click write a check drop-down menu on the contractor you'd like to pay and select Pay by Direct deposit.
3. Enter the payment amount and select a Category for that payment.
4. Choose a corresponding account in QuickBooks and click Pay.
5. Click Yes, let's proceed.
6. Click Close.

Here's an article you can read for more details: Contractor direct deposit.

Then, to pay your vendor via DD, I got you this great article for reference: Pay vendors using Direct Deposit.

We got your back if you have additional queries about it. Have a great day!

Dear lamjuViel,

Thank you for taking time to reply my query.

I am on QBO Plus.

I understand how to set up Direct Deposit for a 1099 contractor.

I have a vendor who is not a 1099 contractor. This vendor does not appear in Workers>Contractors.

I find all QBO articles titled "pay vendors using direct deposit" are related to 1099 contractors or employees, not vendors who are non-1099 contractor. These articles are not helping with non-1099 contractors.

I appreciate your response, user04858.

Intuit's direct deposit service can't be used to pay bills or make payments to individuals who are not independent contractors. This is to meet Federal and State compliance requirements.

You'll want to consider using a third-party app, you can check Desktop Marketplace for supported apps.

Stay in touch with me if you need anything else.

Did you ever find a way to pay non 1099 vendors?

Hi there, @ TX_Summer.

If you have QuickBooks Online on paying the non-vendors, you can use the steps provided by @IamjuViel. You can use direct deposit to pay your non-1099 vendors.

If you have QuickBooks Desktop, you can follow @MaryLurleenM suggestion to check our  Desktop Marketplace for supported apps.

For more details about 1099, I recommend checking these articles: 

• How to create 1099 summary or detail reports
• QuickBooks 1099 Wizard

Please let me know if you have additional questions about QBO. I’ll be more than happy to assist further. Have a good one.

Everyone is avoiding the question.

Why can't we pay non-1099 vendors through direct deposit?  Please be specific.  Is there a banking regulation that prevents us from doing this?  If so, please provide a link?  Is there a federal regulation that prevents us from doing this? If so, please provide a link.  Are there state regulations that prevent us from doing this.  If so, please provide a link(s). 

Here is what Inuit says (What Federal and State compliance requirements?)

Solution

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. WHY?

We currently pay our "ACH" vendors through our bank, which is double work.  

Thanks for chiming in on this thread, RTCM.

Let me share some insights regarding this question.

Intuit follows both the Federal and State laws to maintain payroll compliance. The reason why you're unable to pay a non-1099 vendor through direct deposit is because they are processed in different ways.

The 1099 and bill payments are separate financial transactions, and must adhere to different standards.

As per the IRS rules, any vendor that is marked as a 1099 Independent Contractor, must receive a 1099 at the end of the year. This process is much like an employee would receive a W-2.

In addition, 1099 vendors require a specialized tax filings. To learn more about the 1099 forms, you can read this link: Reporting Payments to Independent Contractors.

When it comes to paying your non-1099 vendor, please check out the following options:

• You can use the Online Bill Payments feature. Please see Use Online Bill Pay in QuickBooks Desktop for more details. 
• Use a third-party service program.
• Use your bank institution to facilitate to direct deposit.
• Print and mail payment checks from QuickBooks Desktop using the Write Checks or Pay Bills modules.

For reference about the error and to help manage the direct deposit for your contractors, feel free to read these guides:

• Error: The vendor payment transmission failed
• Set up and manage direct deposit for your contractors

I'll be around if you have more questions or need help with other concerns. Have a good day ahead.

Ok. This is silly. QB is where we all enter our vendors' bills. QB is where we should be paying the bills.

Right now, our available options are to (1) pay by check (2) pay by cc (3) pay using bank website (4) use a 3rd party ACH marketplace provider. None of these options are acceptable.

(1) At this point in QB's evolution, the printing and mailing checks should be the payment method of last resort. It is slow, unreliable and expensive. Hello! It is 2022!

(2) Most vendors that offer "open credit terms" do not want their customers paying by cc. They don't want to incur the 2.5-3.5% merchant fees. Who would?

(3) Paying vendor bills using a bank's website services is not a good solution . These transactions need to be entered a 2nd time, outside of QB. This is double work and undesirable for larger businesses.

(4) Using 3rd party marketplace solution incurs addition cost and complexity. It should not be necessary.

Paying vendors using a "built-in" ACH solution within QB would the preferred method of payment for most businesses if QB offered it. Imagine, if at the beginning, QB said "our software doesn't actually create and print vendor checks. You will need to hand write all your checks". That would have been stupid. Well, in 2022,  it is really silly that QB does not offer its users the ability to pay vendors using embedded ACH functionality.

Why hasn't QB already come up with an ACH solution to pay vendors?

Do they like selling paper checks?  Are they asleep?

Interesting that QB never responded to your well thought out response. It would be awesome to be able to pay employees reimbursements without having to go through the whole payroll process.  That option is seriously problematic.  It doesn't allow for debiting the various expenses accounts that need to be used or entering memos with explanations. Having to enter a separate JE to accommodate this shortfall is not a viable option.

It is indeed 2022, if direct deposit isn't an option than ACH needs to be an especially with all the mail theft.  The USPS may not be around much longer for us to be able to "mail" checks.

Thank you for joining this thread, WildFish.

I understand how important it is for your business to pay non-1099 vendors via direct deposit. You will save time because you will not have to go through the payroll process.

As my colleague already mentioned, Intuit adheres to both federal and state laws to ensure payroll compliance. That is why you are unable to pay your non-1099 suppliers via direct deposit.

Alternatively, you can use any of the following options:

• Use the Online Bill Payments feature.
• Utilize a third-party service program.
• Use your bank institution to facilitate direct deposit.
• Print and mail payment checks from QuickBooks Desktop using the Write Checks or Pay Bills modules.

We value our customers' voices, especially when developing new features or improving existing ones. This will determine which aspects of the product need to be improved.

I recommend submitting feedback about adding the direct deposit feature for paying non-1099 suppliers. You can send this suggestion directly to our engineers for inclusion in future updates.

Here's how:

1. In your company file, head to the Help menu at the top bar to choose Send Feedback Online and Product Suggestions.
2. This action will open the QuickBooks Feedback window.
3. From there, click the Type of Feedback drop-down to select Product Suggestion.
4. Press the Product Area drop-down and choose which area in QuickBooks needs improvement.
5. Then enter your product suggestions in Here is my suggestion box.
6. Fill in the remaining fields.
7. Click Send Feedback.

For additional resources, here's an article that will walk you through the entire process of setting up direct deposit, paying suppliers with checks, or using the Pay Bills function: Use Online Bill Pay in QuickBooks Desktop.  

You can also save this link in your browser for future use: Expenses and vendors guide. It discusses managing your money out payments, dealing with vendor transactions, and other supplier-related activities.

If you have any further questions about the direct deposit or other QuickBooks issues, reach out to me again. I'll be right here, ready to assist. Have a wonderful rest of your day.

I just sent feedback.  I hope someone is listening and understands this is a very important part of everyday accounting. 

Thank you for mentioning.  If a large number sends feedback, it might get done.