New Bill Pay in QuickBooks & 1099 Updates

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Hector: Welcome to the unofficial QuickBooks accountants podcast. I am joined by my good friend Alicia Katz Pollock, the original, the one and only Rockstar CEO and founder of Royal White Solutions.

Alicia: And I have the privilege of collaborating with Hector Garcia, CPA, the founder of Right Tool for QuickBooks.

Hector: In this episode of the unofficial QuickBooks accountants podcast, [00:00:30] we're going to talk about the new QuickBooks Bill pay feature in QuickBooks online and also 1099 and what's going on with these two features QuickBooks, Bill pay and 1099. Hi, Alicia. How are you?

Alicia: Hey, Hector. I'm great. How are you doing?

Hector: Excellent. So we watched the Intuit in the Know webinar from October and read the October Firm of the future article. And finally, QuickBooks has showed us demonstrated the entire [00:01:00] plan about QuickBooks bill pay in the middle of September, QuickBooks Bill pay launched on new accounts and they're slowly converting existing accounts to QuickBooks Bill pay probably through the end of the year. The ones that already have millio on it Millio Millio payments are going to be weaned off in the next couple of months. So brand new accounts you're going to see QuickBooks Bill pay offering right away. And if you already have Millio, it might take a couple of weeks or months [00:01:30] for you to have that. Alicia, can you give us a Reader's Digest version of what this means? Bill.com Millio QuickBooks Bill payments?

Alicia: Sure. So when Intuit started offering you the ability to pay a bill right inside your QuickBooks without without having to go to your bank or to other software, it started with Bill.com and then they switched over to a different vendor, Melia, which integrated a little bit better, but it was a third party app kind of inside the interface. And so Intuit decided [00:02:00] that they wanted to own that space. And so they have been building their own module, and now it's beginning to roll out. One of the things to know is that, you know, it's kind of back in the beginning, it still needs to be built out. So it doesn't have all of the features that Melia has yet. So those of you who still want those features, you can still go to Emilio's website and do what you're familiar with doing until the QuickBooks version is completely rolled out. Now, Hector, [00:02:30] you were talking about Millio green versus purple. Can you say more about that to help people identify?

Hector: Yeah. So Millio was this big, big partnership that Intuit created, I think, around the pandemic time. And Millio has his own website. And then you log in into their website and you can process all the payments through it. You can create your vendors. You have the ability to pay via check, via ACH, via credit card. It's a pretty comprehensive bill payment system, not as comprehensive [00:03:00] of Bill.com. I mean, Bill.com is really mature in the market, and they've really grown into this huge company that can manage the little businesses and also the big enterprises where Amelia was mostly small businesses, which is where QuickBooks online really does a target that they have. And some users were accustomed to this dual process where they make most of their payments inside QuickBooks online, inside the interface, inside the user experience, and then they process the payments through it [00:03:30] when they were regular routine sort of payments, but then when they needed to make a big change in terms of changing the bank account, the ACH bank account for the vendor, or changing maybe, maybe certain certain parts of the the vendor that you couldn't change inside QuickBooks online. You went into amelia.com to do that directly. That no longer exists in terms of having two types of ways to access Millio. You can still use Amelia if you want to, but you have to go straight into the Amelia website and there's [00:04:00] nothing built in the system. So once they transition out all the Amelia integrated accounts inside, you're only going to have a single bill payment system, which is this new QuickBooks bill pay. And it's important to note that QuickBooks has been behaving like a bank in the last couple of years. You know, they created QuickBooks checking, which Alicia has always been a big fan of and she does a lot of training on. They created QuickBooks checking, they do QuickBooks finance, so it only makes sense to also be part of [00:04:30] the payments business doesn't it?

Alicia: It absolutely does. I mean, it really falls into their goal of being a one stop shop. Now, of course, when they're beginning to roll it out, it's not going to be full featured because they need to build it step by step to make sure everything is working. But the initial experience actually looks and acts very much like what we're already used to. So, you know, you, you make your bills, you go into the bill payment center, you pick which ones you want to pay and then [00:05:00] walk through the payment. Process. So some of the things that to know about where it is right now, the timing of it, if you're doing an ACH payment, it's going to take five days. And if you want to check delivered, it's going to take ten days for them to draft your funds and print the check and mail the check out. But something interesting that they said is that depending on if your account is in quote unquote good standing, you might get quicker turnaround time. So if you're apparently if you're somebody who has a good credit [00:05:30] rating and a good history, then you might actually see shorter times than that.

Hector: So there might be some underwriting criteria as your account gets maybe more age and maturity. Or like you said, we don't know what that looks like if there's any sort of credit checks. But I'm pretty sure that a lot of business owners want to pay their vendors quicker than five days even. And did they say five business days or five days? I mean, it's typically always business days anyway, correct?

Alicia: I would assume it's five business days [00:06:00] a week specifically.

Hector: So it's a week. So it's a week, right? So so today I hit pay and within a week my vendor will have money in the bank account. And that's a very important piece of it because with meglio was like two days, right. Or three days I forgot exactly what it was and Bill.com as well. Or when you go straight into your bank account and you initiate an ACH, it's also two days. So using systems like this that are probably using some sort of intermediary, it's going to delay things a little [00:06:30] bit.

Alicia: Right now, I would imagine knowing Intuit and how fond they are of asking you for an extra fee for instant deposit, I would bet dollars to donuts that were actually going to see. Oh, and if you want it to be next day, you can pay an extra 1% or 3% or something like that. Now, when I'm when I'm talking about that and the quicker turnaround time, that isn't necessarily part of their stated, like what they're promoting right now. But it's things that I gleaned from the conversations that I've had and the things that I've heard.

Hector: Now, just [00:07:00] to do further conjecture, I think I think that if they do have some sort of system where they can speed up those payments, it would be really neat if it's on the vendor side, like if your vendor can make that choice right where you know, they don't tell you, hey, your your customer paid you and it will take five days for the payments to get there. And then the vendor itself pay the premium and get the money earlier. That would be really interesting.

Alicia: Cool idea.

Hector: Yeah, that would be really interesting. Again, just conjecture. [00:07:30] We're giving we're giving into a free consulting here. This would be great. But one thing to mention is this is going to be a big revenue channel for Intuit. This is not just a little tiny value add or protecting themselves by having a third party be involved with Intuit. Like this is actually a strategic move for a new revenue channel. Like just the way payroll is, just the way QuickBooks Live is, just the way payments is processing credit card payments through invoices. [00:08:00] Now it starts free, which is an important part, right? So everybody's going to get their feet wet with it. Everybody's going to have the opportunity to test it, which I love that. I love the fact that I don't have to like this whole production of sign up for something like The Way Payroll is. I can just enable this, try it and test it. I can pay myself, pay a vendor that I know or something like that. So just get started with the process of kind of understanding and discovering how it works. So every account will have the ability to turn on bill pay basic at $0 [00:08:30] a month included with your QuickBooks online subscription, and that's going to include free ACH payments per month, free three five ACH payments per month, with the option to pay $1.50 to issue a physical check.

Alicia: Yeah, so it's five free ACH. And then if you want to do more than five then at each additional ACH is $0.50. And if you want to send the check then it's $1.50.

Hector: Yeah. Exactly. So so if I go from five to I [00:09:00] would have to figure out the exact number from 5 to 39. So I would have three plus an extra $0.50. Or if I'm already at 40, then you want to upgrade from the basic QuickBooks bill payment to the premium QuickBooks bill payment, which is it has a flat additional fee per month is $15 a month, one $515 a month, and then within that $15 a month, you get those 40 ACH payments included. [00:09:30] Now, one thing that I find really interesting on this is that the minute you turn on the premium, then you get what they're calling unlimited 1099 filing. Now, it's not clear to us we're going to roll up into the 1099 conversation, but it's not clear to us whether that unlimited 1099 filing is only within the vendors that were paid via bill payment, or if it just turns it on across all your vendors for that flat $15 [00:10:00] a month.

Alicia: Well, it would have to, because you're not going to pay all of your vendors through this. You're going to pay vendors by credit card, and you're going to pay vendors by manual check or pay them by cash. So they can't really control for and say, we're only going to send 1099 if you pay with our system, that's not viable.

Hector: So yeah, but that's a good tool. But there's an economics problem here because $15 a month flat fee, $15 a month for [00:10:30] unlimited ten nines, well, I guess that's $180 per year. So that's enough money to kind of cover it. Because if you look at the other 1099 products, they all charge per vendor. And then if once you pay per vendor, then you get the 1099 for that vendor, you understand what I'm saying. So that's kind of the challenge that I see here where they're advertising unlimited 1099 filing. And it probably won't be until like January where people are actually doing 1090 nines. Well, we'll know exactly what that means. So limited across all your vendors, regardless of how you pay them, or [00:11:00] unlimited only within the vendors inside the system. And you're right, it would be silly to limit it ten nines to only the people you paid via via bill pay because they implemented this mid-year. So it's like not even possible to go backwards and pay your vendors backwards. So it's just not clear to me, Alicia, if you can give me some clarity or we just leave it open for further reporting in the future. Well, if.

Alicia: You think about the math, they've they've had the ability to send 1099 now for years. And the basic rate has always been 1599 [00:11:30] ish for your first three and then an additional $5 per after that. So they have a really good idea about how much money it costs them, how much money they've been receiving for doing the 1099, and then they know exactly how much it costs that it costs them to do it. And I would imagine if you're at $15 a month or don't forget, there's the Elite, which we haven't talked about yet, that I'm sure they're well covered for their actual costs for doing this. And so they get to offer it as a benefit.

Hector: Yeah. Of course, the big question is [00:12:00] if it's December and I turn on QuickBooks Bill pay and I only pay 15 bucks for the whole year. Right. And then come in January, can I do unlimited 1099 for only that $15 I paid once.

Alicia: So that's interesting that you're hooked for the following year. That's an okay loss leader.

Hector: Yeah, absolutely. So this is what we wanted we were doing in the pre show. We're thinking do we even talk about 1099. Because bill payments at 1090 are different things. But these two things are like Intuit has welcomed mixing these two concepts. And [00:12:30] then we have the elite. So let's talk about the elite because there's an additional really interesting feature on the elite. So what's in the elite? Alicia. Okay.

Alicia: So in the elite you get unlimited ACH payments and then and the 1099 filing. But then what they're also adding in are customized approval rolls. So if you have more than one person involved in your bill pay process, just like we've been talking about the workflows that you can do in QuickBooks Online Advanced, they're including the workflows [00:13:00] with this subscription. So even if you're not in QuickBooks Online Advanced, you can get the elite version of the bill pay and then get those bill pay workflow approvals.

Hector: And that's an extra $90 a month. So let's do some math here. Okay. So if I'm in Qbo plus, QuickBooks Online Plus, which is already $90 a month, and the one feature I loved from advanced that's forcing me or enticing me to go to, to go to [00:13:30] advanced from plus to advanced is bill pay permissions. I don't have to go to advanced. I can stay in plus and then add bill payment elite for an extra $90, making the whole thing 180 instead of 200 versus advanced. And now I get bill pay permissions in Qbo plus, even though I don't have advanced because I added elite bill.

Hector: Pay, so.

Alicia: It's still cheaper. But at that point for that extra 20 bucks, you might as well just go to advanced [00:14:00] all. Yeah.

Hector: But yeah 92. Yeah.

Alicia: But then you would still need to pay for the bill.

Hector: Pay. Yeah it'll be to 90. Right.

Alicia: Exactly.

Hector: Well so let's talk.

Hector: About those roles and permissions.

Alicia: Yeah. So there's three different roles. The first role is a clerk. And that's somebody who can create the bills and they can add them to the system. But they literally can't do anything else other than the data entry of creating the bills. Then there's a bill approver. And that person can approve the bills and pay the bills. And then there's also a third [00:14:30] role called a bill payer, which is kind of in the middle where they can pay approved bills, but they can't edit bills and they can't add bills. So to me, it's an interesting distinction. I'd have to actually see how that plays out.

Hector: Now some companies won't have all three roles. So the big question is, could you have one employee that's just a clerk and then another, maybe the owner of the business is both the approver and the payer. So did they mention that at all whether you can combine roles? [00:15:00]

Alicia: It wasn't clear if you can assign multiple roles to somebody or if they just had to be one. I would imagine that you need the bill approver no matter what, and the clerk is the person who adds it. So whether or not the bill payer, I think is the one that's more a little, a little more specialized, where you want like a bookkeeper to be able to pay a bill, but they're not responsible for creating the bills.

Hector: Yeah, yeah for sure. Yeah, I love that. And, and that's, that's, [00:15:30] that's creeping more into the advanced world. That's the sort of the larger companies, enterprise companies that have permission structures that have, you know, chain of custody with, you know, with the entering the bill and approving the bill and paying the bill. I love that, and I love that they introduced that, um, sort of a way to get the essentials. Simple start. Plus users went into get their feet wet in that particular piece. So that's that's [00:16:00] qbo bill payments. Pretty simple. Either zero $15 or $90. Alicia, is there anything else that we missed?

Alicia: Yeah. One of the things that is actually really important to talk about is the limitations and the things that they're working on because because it is brand new, we know that it's not going to have all of the abilities. So as of right now, you don't have the ability to use your credit card as a funding source. It has to come directly from your bank account, and you don't [00:16:30] have the ability to pay one vendor. If you have multiple bills to that one vendor to pay all the multiple bills with one payment. But that's a yet I mean, Emilio just rolled that out themselves. They didn't have it for the first year either. So but these are both things that Intuit has told you it doesn't have, and I know that they are working on. And another limitation is that it's not available in Canada yet, but it will be coming.

Hector: Okay, since we touched on 1099 earlier, [00:17:00] let's talk about. How people get ten and ninths now in QuickBooks, even if they were not using cube, because again, we don't have clarity over this, but I'm calling it out that I am not 100% sure if the $15 a month truly covers unlimited 1099 filing the way other QuickBooks products do it. So QuickBooks has a product called Contractor Payments. You can either buy it as a standalone product. Basically, let's say [00:17:30] you don't have QuickBooks at all or you have QuickBooks desktop. That could be the case. You pay $15 a month and that includes up to 20 contractors. So for 15 bucks a month, you can add you can have the system that kind of looks like QuickBooks, but it's only limited to creating contractors and issuing issuing payments. And for 15 bucks a month for up to 20 contractors. And you can add to QuickBooks or have standalone, a product that pays your contractors and also includes [00:18:00] the 1099. So again, in either case, standalone product or adding $15 to a simple start essentials plus advanced. It doesn't matter. It's the same 15 bucks a month. It includes 20. If you need more than 20, then it's $2 per month per contractor additional. Okay, now let's say you don't have contractor payments turned on, but you do have payroll turned on in any version of QuickBooks Simple Start Essentials plus Advanced. You have payroll turned on. And the lowest [00:18:30] version of payroll is called Payroll Core.

Hector: And that's $45 a month. And $45 a month allows you to run payroll, and you have to pay an additional $6 per employee or per contractor to run payroll or contractor payments inside of this payroll service. So essentially, now you've got three ways to pay 1099. And any of the three that you have will work. So if you don't need bill pay then just use either [00:19:00] contractor payments or payroll. But if you have bill pay then you can turn on payroll. But don't turn on contractor payments because it's going to be it's going to be less expensive because if you add each contractor via your payroll system, you're going to pay $6 a month versus paying nothing on premium. But remember, premium is up to 40 payments. So now it's it's it could be essentially be a formula that we put on a spreadsheet to figure out, [00:19:30] hey, do we add this contractor for six bucks a month with unlimited payments under the payroll system or under the contractor pay system, or do we include it in this 40 that we get per month with bill pay? So it gets really confusing. And throwing all these numbers doesn't make for great podcast and radio, I get it. But it's something to kind of start to consider because I think, again, throwing this unlimited 1099 filing in the in the bill pay premium, [00:20:00] I think throws a wrench into like just basically choosing the best option. Alicia, are you confused yet?

Hector: Yeah.

Alicia: I mean, you've confused me and I've used all three versions of it. I mean, so I've tried I've tried all three different ways of doing it. And the contractor payments wasn't my favorite because I couldn't use products and services with it. All I could do was flat item. And I have the ability because I use QuickBooks Online Payroll to pay my contractors through that. And it's whatever your [00:20:30] individual employee rate is. I know that you're reading something that says $6, but if you're on elite and it's $8, it's still $8 for those contractors. But I found that kind of cumbersome. So I just went over and started doing it through the millio bill pay and paying my contractors that way. And I've been really happy with that. And so I will myself continue doing it that way with the when we switch over to the bill pay. I am also a user of the 1099 system, so I can definitely speak to that as well.

Hector: Yeah, [00:21:00] I would love to pick your brain on that. So you are not using contractor pay and you're not using you're not adding the contractor via payroll. So you're using Millio to pay your contractors. But then how are you processing your 1099.

Alicia: So the 1099 is a feature that's in your qbo and it only wakes up between November and April, I think is the only time of the year when it's actually available. And so I have been [00:21:30] using the 1099 Wizard for a while. It's had some limitations that have actually been stoppers for me, but there are some really cool things about it. And because of those stoppers, I've actually been working with the development team to kind of give them some advice about some of the things. One of the things that I actually want to start with when we're talking about 1099, in general, is that the IRS has a new limitation as of 2024, that if you were printing and mailing in your 1099, [00:22:00] it used to be a 250. 1099 cap before you had to file electronically, but they really want you to do it. So now it's ten. So if you are filing more than ten. 1099 you have to file electronically. And so Intuit is now in a really good position to help you do that. And that ten is a combined. 1099 and W-2 forms. So all but the smallest companies are going to have to file [00:22:30] electronically now. And into its into its 1099 print kits are still available, so you can still print, but the IRS doesn't want you to.

Hector: Yeah, actually, you read my mind. I was going to ask you about that specifically. So historically, you used sort of one time payment. 1099 system where you already have all the checks recorded. Maybe you pay them with the check, maybe you pay them with ACH, maybe you paid them cash, but it doesn't matter how you pay them. It's already in QuickBooks. [00:23:00] The vendor is set up as a contractor and then you mapped, you know, the expense account to the 1099 line. And it's a it was a one time payment and you generated all your 1099 with a single payment. Is it safe to say that that product will continue to exist in the 2024 filing system, and it won't be replaced with one of these monthly based systems?

Alicia: Well, no. They've actually been really working to improve the 1099 system that in the [00:23:30] past two years, since they split between 1099 Misc and 1099 NEC, their interface made it a little hard to realize that you had to go in and map all of your potential categories, and so people were missing categories occasionally, so they are revising and revamping the interface. So now your category mapping is going to be much more transparent, much easier, much more visual so that you don't overlook any categories. So I'm very, very happy with that part of the process. [00:24:00] And another thing that I have been just insisting on is in the previous version of the 1099, they would give you a list of everybody who was marked for 1099 and show you which ones were missing information. This one doesn't have a Social Security number, this one doesn't have an address. And you would be faced with this list of 30 contractors for all this information that you had to chase down. And then you would go to the next screen, and you only had to send 1099 to 3 people. And [00:24:30] so for a couple of years now, I've been like, okay, just flip flop those two screens. Let's eliminate who actually needs a 1099. And then if we don't have their information, let's go gather it. Let's not chase 30 people for information that we don't need. So I'm happy to say that that is going to be in the new experience.

Hector: Oh that's interesting. Yeah. So because it's possible that you have a contractor that's set up for 1099 in terms of the little checkbox, and it's missing a Social Security [00:25:00] number or tax ID or address. But then at the end, they didn't get paid at all that year.

Hector: You paid them. You pay them right. You pay with a credit.

Hector: Card and they. Yeah, yeah. That's true. That's weird how they don't think about these things. You know, how they should have this logical order. So I'm going to put a little a little note, a little note here in our show notes here that when 1099 wakes up again, as I say, the giant 1099 wakes up again in November, December or January, and we actually [00:25:30] see any of these new things put into action. We'll discuss them.

Hector: In anything else.

Alicia: It should be November 1st is when that is coming live. Now I do want there are a couple of new, more new things that are happening with it. You now have the ability to do corrections. Up until now, you didn't. So if you had filed your 1099 through into it and you had to put in a correction, you actually had to either do it manually or go to another 1099 site like track 1099 or tax 1099. So now you can [00:26:00] do your corrections right inside Cuba, which is huge.

Hector: You have any.

Hector: Information on the cost of that? What the cost think?

Hector: No, it's.

Alicia: Just part of it. That's what you're part of the service that you're already paying for.

Hector: In my experience, working with Cuba Payroll, specifically, if I had to amend 941 or something like that, we would pay like 150 or $200 to amend a form. And again, this is not Intuit saying we made the mistake. We're amending it so we can correct our mistake. [00:26:30] We're saying we're requiring to amend because we forgot to add a paycheck or something like that. We would pay for those corrections.

Alicia: So we don't have any information on whether the corrections are paid or just part of the free service. Yeah. Another change is that up until now, if you were an accountant with your clients on your wholesale program and you ran 1099, you were actually billed for your clients, 1099 because you were the billing agent on [00:27:00] file. But now when you run the 1099. If there is a charge for doing it. We've been talking about the the ways of getting it for free, but you can still run the 1099 without doing any of these other services. In the past it was 1599 for three of them, plus five each last year and the year before. If your clients ran their 1099, they would show up on your bill. Now, when you use the 1099 process, it will actually ask who the billing. [00:27:30] Who's responsible for the billing. And your clients can pay directly. So for a lot of you, that's huge.

Hector: That's good, that's good. So you can still have your client in your in your ProAdvisor discount for 30% off that you're paying out of your pocket because you included QuickBooks as part of your monthly bookkeeping or whatever. And then if the client, on their own, without telling you, decides to turn on 1099 and processes them, they they are going to be forced to pay before they go through. If the [00:28:00] ProAdvisor goes sort of assume somewhere in the billing system and marks that client as self pay for 1099, is that exactly what it is?

Alicia: Well, I don't know what the mechanism is. I think it's just when you do the running it asks who is going to pay. And if you're not in communication with your client, it's possible that they're going to just put it back on your bill anyway. But at least now there's an opportunity for them to put in their billing information to pay for their own. 1099.

Hector: Yeah, but if it gives them the choice and clients go, yeah, yeah, my accountant [00:28:30] will pay for it, no problem. You know, like, I would love to see what that screen looks like. Exactly. What? Like what's what's that what's that behavioral behavioral trigger that shows up when that screen shows up where the customer has to make a decision of calling the accountant or not. I think it would make much more sense if the if the ProAdvisor is the one that that tells the system. Yes, they can run 1099 if they want to, or yes, they can run if they put a credit card in. But if it's up to the user, most users are going to be like, yeah, of course, my accountant, this is all included in our [00:29:00] service, you know what I mean? So like it doesn't really help us that much if the customer can still push it through no matter what. Right now, if the customer presses the button and then the accountant needs to approve it, that's a different story because we're known. But a lot of Proadvisors were reporting that when this was happening to them, it was like they were just surprised by it in February. You know, it wasn't like like they had a choice of of stopping and then they had to have the awkward conversation to go, hey, now you got to reimburse me for the [00:29:30] 1099, which is always an awkward conversation. If you know, you should, you should have an engagement letter and all that stuff that says whether or not it's included. So it shouldn't be that complicated. But no matter what, having to go back to your client and having having to.

Hector: Have it by.

Alicia: Way, you now owe me 1599.

Hector: Yeah, I.

Hector: Know, I know, it's just weird. Plus, whatever the extra per one is more than the normal amount, right? That's it. I think that's enough good information. I think once Qbi payments, QuickBooks Bill payments [00:30:00] goes live in most files, we're going to have enough feedback from our listeners. We're really getting tons of emails from our listeners and feedback. So whatever new things that we didn't cover will surely cover in a future podcast. So with that being said, I think we are done, Alicia, and we'll see you in the next one.

Hector: All right. I'll see you.

Alicia: In the next one.