Megan Davis, Author at Lee Davis & Company

Understanding QuickBooks Contractor Payments and Vendor Payments

In Episode 32 of QuickBooks Mastery for Small Business Success, Erica Northrup and Lee Davis explore one of the newer payment features in QuickBooks: Contractor Payments and Vendor Payments.

Listen to Episode 32

As more businesses move away from paper checks and manual payment processing, QuickBooks offers built-in tools that can simplify accounts payable while reducing the need to handle sensitive financial information.

However, understanding when to use each payment option—and how they differ—is essential for maintaining accurate records and protecting your business.

Why Consider QuickBooks Payments?

The conversation begins with a real-world example.

One of Lee’s clients had been experiencing ongoing problems printing paper checks. Rather than continuing to struggle with manual payments, Lee suggested using QuickBooks’ electronic payment tools.

After a vendor is invited through QuickBooks and completes the required information, payments can be made electronically, creating a faster and more efficient payment process.

For many businesses, this eliminates unnecessary paperwork while improving payment tracking.

Does QuickBooks File 1099s?

One question many business owners have is whether QuickBooks handles 1099 filing for eligible vendors.

According to Lee and Erica, QuickBooks can prepare and file federal 1099 forms for qualifying vendors and contractor payments when they meet IRS reporting requirements, such as payment thresholds and vendor eligibility.

However, some businesses still choose to work with an outside provider because certain state filing requirements may require additional processing.

Before year-end, it’s important to verify both your federal and state reporting obligations.

Protecting Sensitive Financial Information

One of the biggest advantages of using QuickBooks Vendor Payments is reducing the amount of sensitive financial information your business must collect and store.

Rather than requesting banking details directly from vendors, QuickBooks allows vendors to securely submit their own payment information.

This helps reduce the risk of:

Data entry errors
Mishandled banking information
Security concerns
Potential liability

For businesses handling multiple vendor payments each month, this added layer of security can provide valuable peace of mind.

Why Credit Card Security Matters

Erica and Lee also discuss the growing importance of payment security.

Many states have laws governing how businesses store sensitive payment information, and credit card fraud continues to be a significant concern.

The less sensitive payment information your business stores internally, the lower your overall risk.

Using secure payment platforms helps protect both your company and your vendors.

Contractor Payments vs. Vendor Payments

One of the most confusing topics covered in the episode is the distinction between Contractor Payments and Vendor Payments.

Although they appear similar, they serve different accounting purposes.

Contractor Payments

Contractor Payments are designed for independent contractors and payments that require tax reporting.

These payments are generally associated with contractor compensation and 1099 reporting.

Vendor Payments

Vendor Payments are intended for traditional accounts payable transactions.

These payments are connected to vendor bills and allow businesses to pay suppliers electronically without manually collecting banking information.

While there can be situations where the two payment methods overlap, understanding the purpose of each feature helps ensure transactions are recorded correctly.

Requesting Vendor Information

QuickBooks makes it easy to collect vendor payment information securely.

Within the Vendor profile, users can send a request asking the vendor to complete their payment details.

Allowing vendors to enter their own information reduces the likelihood of mistakes and improves data security.

Paying Vendors by ACH

If your business plans to pay vendors electronically through ACH, there are a few important steps to follow.

Be sure to:

Verify that the vendor’s payment information is current.
Enter the vendor bill in QuickBooks.
Process the payment through the appropriate QuickBooks payment option.
Monitor the payment status within QuickBooks.

Following a consistent workflow helps ensure payments are processed accurately and on time.

Preparing for 1099 Season

Even with QuickBooks handling much of the process, year-end preparation is still important.

Erica and Lee recommend:

Confirming vendor information is complete.
Verifying taxpayer identification information.
Ensuring payments are categorized correctly.
Reviewing your 1099 process well before filing deadlines.

Some businesses may also benefit from working with a third-party provider if additional state filing requirements apply.

Common Mistakes to Avoid

The episode highlights several common misunderstandings:

Assuming Contractor Payments and Vendor Payments are the same feature.
Choosing the wrong payment workflow for a transaction.
Failing to verify subscription features before implementation.
Waiting until year-end to collect vendor information.

Taking time to understand these tools upfront can prevent significant administrative work later.

Check Your QuickBooks Subscription

Not every QuickBooks subscription includes the same payment features.

If you’re unsure what capabilities are available in your account, navigate to the Gear icon and review your current subscription and available services.

Understanding what’s included in your plan helps you take full advantage of the tools available to your business.

Final Thoughts

Electronic payment tools continue to make bookkeeping more efficient, secure, and accurate.

Whether you’re paying vendors, managing contractors, or preparing for 1099 season, QuickBooks offers features that can simplify the process while reducing the need to handle sensitive financial information.

As Erica Northrup and Lee Davis emphasize throughout QuickBooks Mastery for Small Business Success, choosing the right payment workflow—and understanding how it works—can help your business save time, stay compliant, and build more efficient financial systems.

If you liked the podcast, you will like our training course. Click on the link below to join our upcoming course.

Join our Zoom Class

11 Essential Business Tools That Help Small Businesses Stay Organized and Grow

In Episode 31 of QuickBooks Mastery for Small Business Success, Erica Northrup steps away from accounting to discuss something every successful business has in common: the right systems and tools.

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While QuickBooks is the foundation of financial management, running a successful business requires much more than bookkeeping. From marketing and scheduling to document management and project tracking, the right software can help businesses become more organized, improve client communication, and save valuable time.

Erica shares the tools that Lee Davis and Company uses every day to streamline operations and better serve clients.

1. Nice Job: Building Your Online Reputation

Happy clients are often willing to leave positive reviews—they just need a simple way to do it.

Nice Job helps automate the process of collecting Google reviews, making it easier to build credibility online without constantly asking customers for feedback.

For service businesses, a strong collection of positive reviews can become one of the most valuable marketing assets.

2. Canva: Professional Design Without a Graphic Designer

Creating polished marketing materials no longer requires advanced design skills.

Canva offers easy-to-use templates for:

Social media graphics
Presentations
Flyers
Marketing materials
Videos
Business documents

One of Erica’s favorite features is the Brand Kit, which helps businesses maintain consistent colors, fonts, and logos across all marketing materials.

A consistent brand builds trust and professionalism.

3. WordPress: The Foundation of Your Online Presence

According to Erica, WordPress is one of the foundational tools used at Lee Davis and Company.

A professional website serves as the digital home for your business, allowing potential clients to learn about your services, contact your team, and access valuable resources.

WordPress also supports thousands of plugins that allow businesses to add scheduling, contact forms, marketing tools, and countless other features as they grow.

4. Google Drive: Keeping Documents Organized

Document management becomes increasingly important as a business grows.

Google Drive provides a centralized location to organize files, collaborate with team members, and securely share documents.

At Lee Davis and Company, clients can upload documents directly to Google Drive, creating a more efficient workflow and reducing the need for email attachments.

5. Google Workspace: Collaboration Made Simple

Google Workspace includes familiar tools such as:

Google Docs
Google Sheets
Google Forms

These applications make collaboration easier while allowing multiple users to work together in real time.

Whether collecting information through forms or organizing data in spreadsheets, these tools help streamline everyday business operations.

6. ClickUp: Managing Projects and Tasks

Every growing business needs a reliable system for tracking work.

ClickUp provides a central location to:

Organize projects
Assign tasks
Monitor progress
Manage deadlines

Rather than relying on sticky notes or memory, businesses can build repeatable systems that improve accountability and productivity.

7. Calendly: Simplifying Scheduling

Scheduling meetings manually often leads to unnecessary emails and confusion.

Calendly automates the scheduling process by allowing clients to book available appointment times.

Once a meeting is scheduled, Calendly can automatically:

Create the calendar event
Generate the Zoom meeting
Send confirmation emails
Deliver reminders

This saves time for both businesses and clients.

8. Zoom: Meeting Clients Anywhere

Virtual meetings have become an essential part of modern business.

Zoom makes it easy to connect with clients regardless of location.

Features such as screen sharing and meeting recording allow businesses to:

Demonstrate software
Train clients
Review financial information
Keep records of important conversations

These capabilities improve communication and create a better client experience.

9. AWeber: Consistent Email Marketing

Staying connected with clients requires consistent communication.

AWeber helps businesses automate email marketing campaigns, newsletters, and follow-up sequences.

Rather than manually sending emails one at a time, businesses can build automated campaigns that continue nurturing client relationships over time.

Consistency is often the key to effective marketing.

10. QuickBooks Online: The Financial Hub

Of course, no discussion of business tools would be complete without QuickBooks Online.

QuickBooks remains the central platform for:

Bookkeeping
Financial reporting
Invoicing
Expense tracking
Payroll
Business insights

Accurate financial information allows business owners to make informed decisions and confidently manage growth.

11. Podcast Production Tools

Lee Davis and Company also uses several tools to produce the QuickBooks Mastery for Small Business Success podcast.

Descript

Descript simplifies podcast production by providing:

Audio editing
Video editing
Automatic transcription
Script-based editing

Editing audio becomes much easier when you can edit the transcript itself.

Logic Pro

Logic Pro helps improve audio quality while allowing producers to create reusable templates with introductions, closing segments, and music.

Templates create consistency across every episode while reducing production time.

Captivate

Once a podcast is complete, Captivate serves as the hosting platform that distributes episodes to podcast directories and makes them available to listeners.

Choosing the Right Business Tools

Throughout the episode, Erica emphasizes that software should support your business systems—not replace them.

Every tool should answer three important questions:

Does this help us become more organized?
Does this solve a real business problem?
Does this help us better serve our clients?

If the answer is yes, the tool is likely worth considering.

Final Thoughts

Technology alone doesn’t build a successful business. Well-designed systems do.

The right combination of tools can help automate repetitive tasks, improve organization, strengthen communication, and create a better experience for both your team and your clients.

As Erica Northrup explains in this episode of QuickBooks Mastery for Small Business Success, every business should intentionally choose tools that support its goals, improve efficiency, and build trust. When your systems work together, your business is better positioned for sustainable growth.

A Real-World QuickBooks Lesson: Avoiding Duplicate Customer Charges

In Episode 30 of QuickBooks Mastery for Small Business Success, Lee Davis and Erica Northrup welcome special guest John Buschbaum, founder of Envirespect Land Services. As a surveyor, forester, wetland scientist, septic designer, septic evaluator, and forester, John manages a busy business with many moving parts.

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Like many small business owners, John wears multiple hats. Along with serving his clients, he also manages the financial side of his business—a challenge that many entrepreneurs can relate to.

John first connected with Lee Davis & Company after seeing the business advertised in the Monadnock Shopper. He enrolled in one of Lee’s QuickBooks classes and has continued meeting with Lee monthly to review his books and make sure everything stays on track.

His story illustrates an important lesson: even experienced QuickBooks users can make mistakes, but with the right guidance, those mistakes can become valuable learning opportunities.

The Problem: A Customer Was Charged Twice

John encountered an issue that many business owners hope to avoid.

A customer was accidentally charged twice once through ACH and the other through QuickBooks Payments.

The mistake wasn’t caused by a software malfunction. Instead, it happened because John misunderstood which QuickBooks function he should use.

He believed he was simply recording a payment in his books.

Instead, he unintentionally initiated a new QuickBooks payment request, resulting in the customer being charged a second time.

Receive Payment vs. Request Payment

This situation highlights one of the most important distinctions in QuickBooks.

When a customer has already paid an invoice, the correct step is to use the Receive Payment function.

Requesting a new QuickBooks payment tells the software to collect money again.

Although the two actions may appear similar on the screen, they serve very different purposes.

Using QuickBooks Payments, the Bank Feed, and Time Tracking Effectively

In Episode 29 of QuickBooks Mastery for Small Business Success, Lee Davis and Erica Northrup discuss three features that can improve efficiency for business owners when used correctly: QuickBooks Payments, the Bank Feed, and Time Tracking.

Each of these tools is designed to simplify everyday business operations. However, like any feature in QuickBooks, success depends on understanding how they work and using them properly.

Listen!

QuickBooks Payments: Making It Easier to Get Paid

One of the biggest advantages of QuickBooks Payments is convenience.

Instead of relying on paper invoices and mailed checks, businesses can email invoices that include a secure payment option. Customers can simply click a button to pay online, helping businesses receive payments faster and improve cash flow.

While many companies use QuickBooks Payments, others may prefer contractor payment systems or ACH transfers depending on their business model and customer preferences.

The key is choosing the payment solution that best fits both your business and your clients.

Setting Up QuickBooks Payments

Before accepting payments through QuickBooks, there are several setup steps to complete.

These include:

Verifying your bank account
Completing required business verification documents
Meeting QuickBooks’ payment processing requirements

Taking the time to complete the setup correctly helps ensure payments are processed smoothly.

Protecting Customer Payment Information

Erica and Lee also stress the importance of payment security.

Storing customer credit card information can expose a business to unnecessary risk and liability.

Using secure payment processing tools helps protect both your business and your customers while reducing the responsibility of handling sensitive financial information yourself.

Is QuickBooks Payments Right for Every Business?

Not necessarily.

Before enabling QuickBooks Payments, consider several questions:

How do your customers prefer to pay?
Will online payments improve customer convenience?
Are you comfortable with the payment processing fees?

For businesses that regularly process large-dollar transactions, those fees can add up quickly.

Evaluating your customer base and pricing structure can help determine whether QuickBooks Payments is the right solution.

Sending Invoices Is Simple

Once an invoice is created in QuickBooks, it can be emailed directly to the customer.

When QuickBooks Payments is enabled, the invoice includes a built-in payment option, allowing customers to pay immediately.

Without integrated payments, businesses often rely on mailed checks or other manual payment methods, which can slow down collections.

Avoid a Common Payment Mistake

One important reminder from Erica and Lee is to use the Receive Payment function correctly.

If a customer has already paid an invoice, record the payment using Receive Payment rather than creating a new charge.

Failing to do so could accidentally charge the customer a second time, creating unnecessary confusion and frustration.

Getting Started with the Bank Feed

The QuickBooks Bank Feed is another feature that can save time by importing transactions directly from your financial institutions.

However, Lee recommends waiting until you’ve been using QuickBooks for several months before activating the Bank Feed.

Why?

Learning to enter transactions manually first helps you understand:

How accounts are categorized
Which forms should be used
How transactions flow through QuickBooks

Building this foundation makes it much easier to recognize and correct mistakes later.

Match Instead of Add

Once the Bank Feed is active, one best practice stands out:

Match transactions whenever possible instead of simply adding them.

Matching connects downloaded bank activity to transactions you’ve already entered, helping prevent duplicate entries and improving the accuracy of your financial records.

Accounts That Can Connect Through the Bank Feed

The Bank Feed can connect to several types of financial accounts, including:

Checking accounts
Credit cards
Loans

Connecting these accounts allows QuickBooks to import transactions automatically, reducing manual data entry.

Choosing the Right Bank

Not every financial institution integrates with QuickBooks in the same way.

Before choosing a bank, consider:

Whether it has a strong QuickBooks integration
Whether connection fees apply
How reliably transactions synchronize

A well-supported financial institution can make bookkeeping much smoother.

What to Do If the Bank Feed Stops Working

Occasionally, bank connections experience interruptions.

If that happens, Erica and Lee recommend several troubleshooting steps:

Use Google Chrome, as QuickBooks performs best in that browser.
Click the Update button to refresh the connection.
Contact QuickBooks Support to determine whether there is an active connection issue between QuickBooks and your financial institution.

Many connection issues are temporary and can be resolved with a simple update.

Why Time Tracking Matters

The final topic in this episode is Time Tracking.

For service-based businesses, tracking employee or owner time provides valuable information for billing, payroll, and profitability.

Within QuickBooks, users can record:

Employee or contractor
Customer
Service provided
Hours worked
Date
Notes

Maintaining complete time records helps improve invoicing accuracy and provides better insight into labor costs.

Track Time Every Day

Lee recommends entering time daily rather than trying to remember hours at the end of the week.

Daily time tracking helps:

Improve billing accuracy
Reduce forgotten hours
Keep payroll records organized
Provide more reliable job costing information

Consistent habits make reporting more accurate and reduce administrative work later.

Final Thoughts

QuickBooks offers powerful tools to help businesses collect payments, automate transaction imports, and track employee time. But these features are most effective when they’re implemented thoughtfully and used consistently.

By understanding how QuickBooks Payments, the Bank Feed, and Time Tracking work together, business owners can streamline operations, improve cash flow, and maintain more accurate financial records.

As Lee Davis and Erica Northrup emphasize throughout QuickBooks Mastery for Small Business Success, technology is only as effective as the processes behind it. Taking the time to learn these tools today can save countless hours—and costly mistakes—in the future.

If you liked the podcast, you will like our training course. Click on the link below to join our upcoming course.

Join our Zoom Class

How QuickBooks Turns Everyday Transactions into Meaningful Financial Reports

In Episode 28 of QuickBooks Mastery for Small Business Success, Lee Davis and Erica Northrup explain how every transaction entered into QuickBooks ultimately becomes part of your financial reports.

For many business owners, reports like the Profit & Loss Statement and Balance Sheet seem to appear automatically. However, those reports are only as accurate as the transactions and categories behind them.

Understanding how QuickBooks builds your reports can help you identify mistakes before they become costly problems.

Listen

It All Begins with the Chart of Accounts

Every financial report in QuickBooks starts with your Chart of Accounts.

When you first create a QuickBooks company file, the software includes several standard accounts. From there, you should customize the chart of accounts to fit your business.

Erica and Lee recommend starting with the basics and then adding industry-specific accounts as needed. One helpful guide is your Schedule C, which can help organize income and expense categories appropriately.

The chart of accounts is the foundation of your bookkeeping. Every transaction you enter is assigned to one of these categories, and those categories determine where information appears on your financial statements.

Income Categories Matter

Income is more than just one number.

Many businesses have multiple sources of revenue, such as:

Product sales
Service income
Other revenue streams

Creating appropriate income categories allows you to understand exactly where your revenue is coming from and which parts of your business are the most profitable.

Cost of Goods Sold Helps You Price Correctly

Another critical category is Cost of Goods Sold (COGS).

This includes the direct costs associated with producing your products or delivering your services, such as materials and direct labor.

Tracking COGS accurately allows you to:

Calculate gross profit
Understand profit margins
Set profitable pricing

Without accurate Cost of Goods Sold, it’s difficult to know whether your business is truly making money.

What Appears on the Balance Sheet?

Unlike the Profit & Loss Statement, which measures performance over a period of time, the Balance Sheet provides a snapshot of your business at a specific moment.

The Balance Sheet includes:

Assets
Liabilities
Owner Equity

Together, these categories show what your business owns, what it owes, and what belongs to the owner.

Correct Amount, Wrong Category = Wrong Report

One of the most important lessons from this episode is that accuracy isn’t just about entering the correct dollar amount.

If a transaction is placed in the wrong category, your financial reports will still be wrong.

For example, a payment recorded as an expense instead of a liability may have the correct amount, but it produces misleading financial statements.

Proper categorization is just as important as entering the transaction itself.

Loan Payments Require Special Attention

Loan payments are a common source of bookkeeping mistakes.

Many business owners record the entire payment as an expense.

In reality, a loan payment typically includes:

Principal
Interest

Only the interest portion is generally deductible as a business expense.

The principal reduces the loan balance, which appears on the Balance Sheet.

Failing to separate these amounts can affect both your financial reports and your tax deductions.

Owner Draw Is Not an Expense

For LLC owners, compensation is often taken through an Owner Draw.

An Owner Draw:

Reduces owner equity
Does not appear as a business expense
Is not tax deductible as an operating expense

Misclassifying Owner Draw as an expense can significantly distort your Profit & Loss Statement.

Equipment Belongs on the Balance Sheet

Large equipment purchases should generally be recorded as assets.

Rather than immediately becoming an expense, equipment appears on the Balance Sheet and is typically depreciated over time.

Recording equipment correctly provides a more accurate picture of both your assets and your long-term financial position.

What Builds the Profit & Loss Statement?

Your Profit & Loss Statement is built from the daily transactions you enter into QuickBooks.

These include:

Invoices
Sales Receipts
Bills
Expense forms
Payroll costs
Credit card transactions

Together, these transactions produce the information used to calculate:

Income
Cost of Goods Sold
Expenses
Net Profit

This is why accurate data entry is so important.

What Affects the Balance Sheet?

Several everyday transactions contribute directly to your Balance Sheet, including:

Bank account balances
Credit cards
Loans
Accounts Receivable
Owner Equity
Owner Draw

These accounts work together to provide a snapshot of your company’s financial health at a specific point in time.

Your Balance Sheet Can Reveal Hidden Problems

Many business owners focus primarily on the Profit & Loss Statement.

However, Erica and Lee point out that the Balance Sheet often reveals issues that aren’t immediately visible elsewhere.

Unexpected balances in loans, accounts receivable, owner equity, or bank accounts can indicate bookkeeping errors that need attention.

Reviewing both reports together provides a more complete picture of your business.

Watch Out for Bank Feed Errors

While the QuickBooks Bank Feed can save time, it isn’t perfect.

QuickBooks may recommend categories that are incorrect for your business.

Automatically accepting those recommendations without reviewing them can lead to inaccurate financial reports.

Automation should support your bookkeeping—not replace careful review.

How to Verify Your Reports

To ensure your reports are accurate, Erica and Lee recommend a few simple habits:

Reconcile your accounts regularly.
Review large or unusual transactions.
Verify that transactions are categorized correctly.
Compare your reports month over month to identify unexpected changes.

Regular review helps catch small mistakes before they become major accounting problems.

Final Thoughts

QuickBooks doesn’t create financial reports out of thin air. Every report is built from the transactions you enter and the categories you assign.

By maintaining a well-organized Chart of Accounts, categorizing transactions correctly, and reviewing your reports consistently, you’ll gain financial information you can trust.

As Lee Davis and Erica Northrup emphasize throughout QuickBooks Mastery for Small Business Success, understanding how QuickBooks transforms daily transactions into financial reports empowers business owners to make better decisions, avoid costly mistakes, and build stronger businesses.

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