I bought Payroll to pay contractors. The business does not have any W2 employees. But QB won’t let me proceed without adding employees. Can I just pay contractors?

Hi there, hello118.

I'm glad that you are now using QuickBooks payroll service to pay your contractors. I see that your business will not report to any W-2 employees.

To answer your concern, yes, we can still use the payroll service by not touching the employee's side only by paying your contractors. As long as your payroll subscription with Intuit is active, we can pay contractors by direct deposit, even if you don’t run payroll for active W-2 employees if you want to. 
 

To guide you further on how to set it up, please follow the steps below:

1. Go to Workers on the left panel.
2. Select the Contractors tab. Then, select the + Add a Contractor button.
3. In the Details section, you can select Individual or Business for the contractor type. Then, add information on your contractor’s Federal EIN or their Social Security number.
4. In the Payment section, you can select Direct deposit.
5. Enter their direct deposit info, then select Save.

Once done, we also need to make sure that your company’s payroll is set up for direct deposit payments and entered your contractor’s bank account info so you can pay them through direct deposit. Then, we can now proceed following the steps below on how you can pay your contractors within QBO:

1. Follow the first steps above.
2. Then, select the Contractors tab.
3. Next to the contractor’s name, select the dropdown, and then Pay with direct deposit.
4. Add the amount for the direct deposit.
5. Select the account you use to track paychecks in QuickBooks. (Expense account)
6. Then, click Save and Send.

I'm always here if you require additional information about the payroll service in QBO. I would like to help you further as much as I can. Stay safe and be well.

Is there a way for you to check if my subscription is active? When I click on contractors, I do not see a screen like that which lets me input all that information. The only “next step” option I have is putting in information to set up payment schedules and tax details for W2 employees. 

Yes, there's an option to see the subscription we're currently using, willdrabold. 

Features and options vary per QuickBooks Online plan and managing 1099 contractors are available for each plan. To check your subscription, you can follow these steps:

1. Go to the Gear icon.
2. Click Account and Settings. 
3. From the left menu, select Billing and Subscription.
4. You'll see the type of subscription you linked into QuickBooks and an Active status will also show. 

To check if this is a browser issue or not, you can sign in to your QuickBooks Online (QBO) account using a private browser. Then, try accessing the Workers menu and select Contractor. If you can access it with the options shared by my colleague, you can clear your browser's cache to remove piled-up cache files. You can also use a different supported browser to isolate unexpected behavior such as Google Chrome, Internet Explorer, or Mozilla Firefox. 

I'll be here if you have other questions. You take care always and stay safe!

Some systems do require at least one employee before you can add in contractors but I see QB does not.  My assumption is that is to try to help you avoid questions from IRS on how company has no employees, especially if there is work for multiple contractors. Suggest make sure you have confirmed you are legal, since that would be easy for IRS to spot and possibly flag for audit.  So use this as an FYI to CYA.