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Intuit
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Contractor direct deposit

Learn more about contractor direct deposit in QuickBooks Online Payroll.

With an active payroll subscription, pay your contractors via direct deposit. It’s a faster and more efficient way of paying them instead of cash or check.

Here’s what you need to know about direct deposit’s accessibility, billing, timing and more.

Accessibility

To use direct deposit,  you need to subscribe to any version of QuickBooks Online Payroll.

Note: 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.

To start using direct deposit (DD) make sure that:

  • 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.

To view your transactions:

  1. Go to the Expenses menu, then select Expenses.
  2. Select the transaction that you want to view.

To print a pay stub:

  1. Go to the Expenses menu, then select Vendors.
  2. Select the contractor or vendor that you want to view.
  3. Under the Transaction No field, select the transaction that displays DD.

Note: We don't support direct deposit deductions for contractors such as the deduction for a cash repayment.

Billing

On top of your monthly payroll subscription, an additional surcharge will be added to your billing. This per contractor, per month fee is the same as the per active employee fee in your QuickBooks Online Payroll subscription. You're able to issue as many direct deposit payments to a contractor as needed with just this flat fee.

Note that the per contractor surcharge only applies if you make a  direct deposit payment to a contractor during the month.

If you want to know the contractor surcharge for the new payroll offering, visit Intuit Website.

No, our system will be able to identify if you have run a direct deposit payment for that contractor.

No, you will only be charged if you have run direct deposit payments for you contractors.

That is a possibility. Please be sure to review this feature with your clients. Determine if they are interested in using it before incurring any fees.

Timing and process

Unprocessed direct deposit payment

If the direct deposit payment is still unprocessed or pending, you have the option to void or delete the transaction. To void or delete a transaction:

  1. Go to Expenses and select Expenses.
  2. Find the transaction, then open it.
  3. Select More to void or delete.
  4. Select Yes to confirm the action.

Processed direct deposit payments

If the direct deposit payment already went through or it's already processing, it cannot be stopped. Create a journal entry to offset the amount.

The funds will be debited out of your bank account on your scheduled pay date. Here's a quicklist to guide you:

If you date your paychecks for... Send payroll by 5:00 PM PT on... Your account will be debited on... Contractors get paid on (Direct Deposit only)...
Friday Thursday Friday Friday
Monday Friday Monday Monday
Tuesday Monday Tuesday Tuesday
Wednesday Tuesday Wednesday Wednesday
Thursday Wednesday Thursday Thursday

Contractor direct deposit is scheduled to post on the pay date. Here's the lead time to guide you:

  • QuickBooks Online Payroll Enhanced and QuickBooks Online Payroll Core: Before 5:00 PM PT 1 business day prior to check date, provided check date is a business day. Federal banking holidays are not considered business days.
  • QuickBooks Online Payroll Full Service, QuickBooks Online Payroll Premium and QuickBooks Online Payroll Elite: Before 7:00 AM PT on check date provided check date is a business day. Federal banking holidays are not considered business days.

Learn more on how federal banking holidays affect processing of DD.

Yes, customers and contractors receive an email confirmation when:

  • Direct deposit payment is scheduled and settled
  • Intuit fails to debit from the funding account (Customer only)
  • Intuit fails to credit to posting account (Customer only)

Contact customer support for assistance.

Yes, the Transaction No field will display DD on the expense record if the transaction was made via direct deposit.

No, at this time you must be using a desktop browser with QuickBooks Online to create contractor direct deposits.

Absolutely! This is an enhancement that can help you plan ahead and schedule payment dates up to 90 days in advance. Here's how:

To schedule a contractor payment on a future date:

  1. Select Workers, then Contractors.
  2. Choose contractor's name, then select Pay with direct deposit.
  3. On the Contractor payment window, complete the normal payment flow, then select your preferred pay date from the calendar.
  • QuickBooks Online Payroll Enhanced and QuickBooks Online Payroll Core: Before 5:00 PM PT 1 business day prior to check date, provided check date is a business day. Federal banking holidays are not considered business days.
  • QuickBooks Online Payroll Full Service, QuickBooks Online Payroll Premium and QuickBooks Online Payroll Elite: Before 7:00 AM PT on check date provided check date is a business day. Federal banking holidays are not considered business days.

Accounting

When a contractor is paid it will reflect in the check register. When downloading transactions from your bank, we will attempt to match the transaction. There remains the possibility that if it is not matched, a duplication could occur.

Yes. You can now assign a class, and a customer or project when creating a contractor direct deposit.When assigning a project, enter the project name in the customer field.

At this point, we do not support file attachments for direct deposit payments. In the future, we will work on the ability of employers to attach an invoice to a payment record.
At this time we do not support this capability in contractor direct deposit.

Setup

You have two options to add your funding bank account information:

Option 1 - Through employee setup

See Enroll in direct deposit (DD) for more details.

Option 2 - Through contractor setup

  1. Select Workers, then Contractors.
  2. Under the price, select Get Started.
  3. Select Set up direct deposit.
  4. Select Add bank. Enter your banking credentials or bank account information.
  5. After you enter bank information, you need to complete a test transaction to verify the bank account on file. If a bank account was connected with your banking credentials, you will not see this prompt.Review direct deposit bank credentials in QuickBooks Online
  1. Select Workers, then Contractors.
  2. Choose the contractor's name.
  3. In the contractor's profile, select Change bank under Payment details.
  4. After updating the bank information select Save.Change contractor’s direct deposit bank information in QuickBooks Online
  1. Select Workers, then Contractors.
  2. Choose the contractor's name.Note: The drop-down for Pay with direct deposit will show if the bank account is already added to the contractor's profile.
  3. Select Add Bank.Set up direct deposit payment for contractors in QuickBooks Online
  4. Enter the contractor's bank account information, then choose Save.
  1. Select Workers, then Contractors.
  2. At the contractor’s name, select Pay by direct deposit from the drop-down.Note: If you have already set up for a direct deposit, Pay by direct deposit will be your default option.
  3. Select either Pay Bills or Pay Expenses. Enter the needed information, then select a Category for the payment.
  4. Select a Corresponding account in QuickBooks.

Note: This is the account inside your chart of accounts that this transaction will post to. Not the account we will debit from. This account must be classified as a Checking or Savings account in QuickBooks Online.

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