{"id":64,"date":"2024-12-10T15:20:32","date_gmt":"2024-12-10T15:20:32","guid":{"rendered":"https:\/\/www.gunbycpa.com\/blog\/?p=64"},"modified":"2025-03-10T15:22:47","modified_gmt":"2025-03-10T15:22:47","slug":"qa-paying-contractors-through-quickbooks-online","status":"publish","type":"post","link":"https:\/\/www.gunbycpa.com\/blog\/qa-paying-contractors-through-quickbooks-online\/","title":{"rendered":"Q&A: Paying Contractors Through QuickBooks Online"},"content":{"rendered":"

\"BlackPayroll is probably the most difficult element of running a small business. QuickBooks Online can make it easier.<\/em><\/p>\n

Taking on a new worker is a daunting task in terms of your accounting responsibilities as a business owner. If the individual will be an employee, you\u2019ll have tons of paperwork to do as you deal with the IRS and state taxing agencies, benefits providers, and the new hires themselves.<\/p>\n

Independent contractors, on the other hand, take far less work. But you must be sure the person you\u2019re hiring is indeed a contractor and shouldn\u2019t be classified as an employee. The IRS takes this distinction very serio0usly. Ask us if you\u2019re at all unsure.<\/p>\n

You can compensate independent contractors manually. But it can be a lot of work, and it\u2019s prone to errors that can cost you in terms of penalties and unhappy workers who count on you for their livelihood. QuickBooks Online can speed up and simplify your payroll tasks and greatly decrease errors. Here are answers to some common questions.<\/p>\n

Will it cost me more to pay independent contractors in QuickBooks Online?<\/strong><\/p>\n

If you\u2019re only paying independent contractors, you can use QuickBooks Online\u2019s built-in tools that allow you to issue paper checks to them. But you\u2019ll need add-on capabilities if you want to pay by direct deposit or have QuickBooks e-file 1099-NECs for you, for example, that require additional monthly fees.<\/p>\n

How does QuickBooks Online track information about contractors?<\/strong><\/p>\n

QuickBooks Online walks you through the process of creating individual records for contractors. You\u2019d click\u00a0Expenses<\/strong>\u00a0in the toolbar and select\u00a0Contractors<\/strong>. Click\u00a0Add a contractor<\/strong>. A window opens containing fields for the contractor\u2019s name and email address. Enter them, then check the box below it. QuickBooks Online will send an email to the individual, inviting him or her to set up an Intuit account (or sign into an existing one). Click\u00a0Add contractor<\/strong>.<\/p>\n

You can invite contractors to complete their personal profiles.<\/em><\/p>\n

QuickBooks Online then walks the contractor step by step through the process of completing the personal profile, including contact information, business type, and Social Security number, which will be used to create a Form\u00a0W-9<\/strong>, a document required by the IRS. When the contractor finishes it, she\u2019ll be able to digitally sign it, and you\u2019ll be notified that the task is done.<\/p>\n

How Do You Pay Contractors?<\/strong><\/p>\n

Unless you subscribe to\u00a0QuickBooks Contractor Payments<\/strong>\u00a0and can set up direct deposit, your options for paying contractors will be limited. You can write a check, create an expense, or enter a bill from the\u00a0Contractors<\/strong>\u00a0\u201chomepage.\u201d Hover over\u00a0Expenses<\/strong>\u00a0in the toolbar again and click\u00a0Contractors<\/strong>, then select your option from the dropdown list at the end of each row.<\/p>\n

Or, from this same page, click\u00a0Pay contractors<\/strong>. The page that opens displays a list of your contractors in a table. Select the bank account you\u2019ll be using from the drop-down list in the upper left. Click the box in front of the name of each contractor you want to pay to open its details window. Since you haven\u2019t set up direct deposit yet, your only option here is to create and print paper checks. Enter the\u00a0Check number<\/strong>\u00a0under\u00a0Payment Method<\/strong>\u00a0and complete the rest of the fields here.<\/p>\n

Can I see how much I\u2019m paying contractors?<\/strong><\/p>\n

Yes, you can. Click\u00a0Reports<\/strong>\u00a0in the toolbar and scroll down to\u00a0What you owe<\/strong>. There are two reports here that you can customize and run,\u00a01099 Contractor Balance Detail<\/strong>\u00a0and\u00a01099 Contractor Balance Summary<\/strong>. You can also run\u00a0Contractor Payments<\/strong>\u00a0(under\u00a0Payroll<\/strong>) to see what payments you\u2019ve made to contractors.<\/p>\n

Can I create and file Form 1099-NECs for my independent contractors?<\/strong><\/p>\n

Not only can you, but you must submit\u00a0Form 1099-NECs<\/strong>\u00a0for independent contractors who you\u2019ve paid $600 or more during the tax year. And if they\u2019re not filled out correctly, you could face penalties from the IRS. Also, your contractors are counting on you to do this right because they must report their income to the IRS.<\/p>\n

If you pay an independent contractor $600 or more in a tax year, you must send a\u00a0Form 1099-NEC<\/strong>.<\/em><\/p>\n

You\u2019ll get the information you need from two places: the Form W-9 that the contractor supplied prior to being paid for the first time and the total compensation paid from your QuickBooks Online files. You can print your own 1099s and submit them through the U.S. Mail or pay QuickBooks Online to file them electronically.<\/p>\n

A Complicated Chore<\/strong><\/p>\n

The mechanics of paying contractors aren\u2019t difficult but remember that you\u2019re dealing with a task that must be done exactly right. We strongly urge you to let us assist as you set up and pay your first contractors. You don\u2019t have to deal with the IRS and benefits providers like you do if you\u2019re paying employees, but you want to be sure your payments are documented correctly so your 1099s are accurate.<\/p>\n","protected":false},"excerpt":{"rendered":"

Payroll is probably the most difficult element of running a small business. QuickBooks Online can make it easier. Taking on a new worker is a daunting task in terms of your accounting responsibilities as a business owner. If the individual will be an employee, you\u2019ll have tons of paperwork to do as you deal with […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[9],"tags":[],"_links":{"self":[{"href":"https:\/\/www.gunbycpa.com\/blog\/wp-json\/wp\/v2\/posts\/64"}],"collection":[{"href":"https:\/\/www.gunbycpa.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.gunbycpa.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.gunbycpa.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.gunbycpa.com\/blog\/wp-json\/wp\/v2\/comments?post=64"}],"version-history":[{"count":1,"href":"https:\/\/www.gunbycpa.com\/blog\/wp-json\/wp\/v2\/posts\/64\/revisions"}],"predecessor-version":[{"id":67,"href":"https:\/\/www.gunbycpa.com\/blog\/wp-json\/wp\/v2\/posts\/64\/revisions\/67"}],"wp:attachment":[{"href":"https:\/\/www.gunbycpa.com\/blog\/wp-json\/wp\/v2\/media?parent=64"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.gunbycpa.com\/blog\/wp-json\/wp\/v2\/categories?post=64"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.gunbycpa.com\/blog\/wp-json\/wp\/v2\/tags?post=64"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}