Companies that hire independent contractors use the same process used to pay other vendors. You don't need to add an independent contractor to the Employee Center or manage taxes on behalf of the contractor. You can track the type of work completed for you by using items. At the end of the year, consult with your tax advisor to determine whether an independent contractor needs to receive a 1099-MISC tax form from your company. As of 2013, you don't need to issue a 1099-MISC for independent contractors that don't meet the IRS payment threshold of $600.

Enter Bill

Click the "Vendors" menu and select "Enter Bills" from the drop-down menu.

Click the "Vendor" drop-down menu and select the independent contractor from the list. If the contractor isn't displayed in the list, type the contractor's name in the text field and provide the address and contact information.

Click the "Date" field and change the date of the bill, if necessary.

Select the "Amount Due" field. Enter the total for the payment. If you keep reference numbers, need to define terms of the payment or want to add a memo, add that information to the Ref No, Terms or Memo field.

Click the "Expenses" tab and select the "Account" field. Choose the account to use for the payment. You can enter multiple accounts to pay the contractor by clicking another "Account" field and selecting the appropriate account.

Click the "Save" button to finalize the bill entry.

Pay Bill

Click the "Vendors" menu and select "Pay Bills" from the drop-down list.

Select your Accounts Payable account from the list. If you only have one Accounts Payable account, the option is already displayed for you.

Click the column next to each independent contractor you want to pay. You can select other bills that you previously entered as well.

Select the "Payment Method" drop-down menu. Choose from "Credit Card," "Check," "Direct Deposit" or "Online Bank Pmt" as the method of payment.

If you use cash, a debit card, PayPal or an EFT, select the "Check" option.

Click the "Date" field and change the date if you want to schedule a future payment.

Click the "Pay Selected Bills" button to record and pay the bill.


Depending on your payment method, recording a payment invokes a few possible scenarios. For checks, QuickBooks prepares a check for printing and records the check in the check register. With credit card payments, a charge for each contractor is displayed in the credit card register. Cash payments show up in your cash account register. Direct deposit gets sent straight to your direct deposit service and online bank payments get sent to your bank for processing. Both direct deposit and online payments appear in your check register.


Information in this article applies to QuickBooks 2013. It may vary slightly or significantly with other versions or products.