Vendor & contractor payments

What are vendor payments?

Vendor payments is the money-out side of Merchant360: a place to track the vendors and contractors you pay, keep each one's W-9 on file, and have the year's totals roll straight into a 1099-NEC at tax time. It is the mirror image of invoicing, where you get paid.

Find it at Accept Payments → Vendor Payments. The top of the page shows three numbers at a glance: how many payees you have, how much you have paid them this year, and how many are at or over the $600 IRS threshold that triggers a 1099-NEC.

Use it for anyone you pay who is not an employee: freelancers, contractors, landlords, service vendors. There is nothing to set up first. Add a payee, record what you pay them, and the totals, the W-9, and the 1099-NEC take care of themselves.

Done looks like this: every contractor you pay is a row in the payee list with a TIN and a W-9, Paid in this year matches your checkbook, and in January the 1099-NEC forms panel lists exactly who needs a form.

If a payee shows unverified, no TIN, or needs W-9 on their row, that is the to-do list for a clean tax season. If the 1099-NEC due count looks wrong, check that each payment was recorded with Counts toward 1099 set correctly and that corporations you do not file for have the 1099 vendor flag off.

Add a payee

A payee is anyone you pay who might need a 1099-NEC: a freelancer, a contractor, a landlord, a service vendor. Add them once and every payment you record rolls up under them.

Have their W-9 handy if you already collected one, because the legal name and TIN come straight from it. If you plan to pay them by bank, you also need their routing and account numbers.

Done looks like this: the payee is a row in the list with their type, a masked TIN, and a Paid in figure of zero until you record the first payment.

If the save fails, the name is missing or the TIN is not nine digits. If you do not have the TIN yet, save without it, click W-9 to send them a prefilled form, and add the TIN when it comes back. If a payee was added twice, archive the duplicate; its history is kept.

1. 1Click Add payee. Choose Business or Individual; this decides how their name is treated on the W-9 and the 1099.
2. 2Enter their name and, when you have it, their address, email, and phone. The address is what prints on their 1099-NEC, so it is worth getting right.
3. 3Enter their TIN / EIN from their W-9. It is encrypted the moment you save it; only the last four digits are ever shown back to you.
4. 4Leave 1099 vendor on for anyone reportable. Turn it off for a payee who never needs one, for example a corporation you are not required to file for.
5. 5Optionally add their bank for ACH payout: routing, account, and Checking or Savings. Click Save payee.

Record a payment

Recording a payment tells Merchant360 you paid a vendor, whether you sent it by check, cash, bill-pay, or a transfer from your bank. It does two things: it books the amount as a Contractor expense so your Profit & Loss stays honest, and it adds to that payee's reportable total for the year.

Record every payment as you make it. Recorded payments flow into your P&L under Bookkeeping, so your expense picture and your 1099 totals always agree.

Done looks like this: the payee's Paid in figure goes up by the amount, and the same amount appears as a Contractor expense on your Profit & Loss for that date.

If the amount was reimbursed goods rather than services, untick Counts toward 1099 so it is booked as an expense but not reported. If you recorded the wrong amount, record a second entry for the difference with a memo explaining it. If the P&L does not show it, check the date on the payment falls inside the P&L range.

1. 1On a payee's row, click Record. Enter the amount, the date, and an optional memo (what it was for).
2. 2Leave Counts toward 1099 ticked if it counts toward their 1099-NEC. Save it.
3. 3The amount immediately books as a Contractor expense in your bookkeeping and updates the Paid in figure on the payee's row.

Collect and store a W-9

You need a W-9 on file for anyone you will send a 1099-NEC. Merchant360 both generates one to send and stores the signed copy, encrypted, so you are not chasing paper in January.

Collect it before the first payment when you can. Done looks like this: the payee's row shows W-9 on file with a download link, and the TIN on the row came from the signed form.

If Record W-9 will not save, the TIN is not nine digits, the signer's name is missing, or the address is incomplete. If the vendor returns a form under a different legal name, enter the name exactly as signed, because that is what the IRS matches against. If you need the stored copy later, click W-9 on file to download it.

1. 1On a payee's row, click W-9. Use Prefilled W-9 to send to download a form with their name and address already filled in, so they just confirm, sign, and return it.
2. 2When the signed form comes back, use Record W-9 to file it: enter the legal name, business name, tax classification, TIN type and TIN, address, and the name it was signed under. Merchant360 generates the executed PDF and stores it encrypted against that payee.
3. 3Once a W-9 is on file, the row shows W-9 on file – download, which you can click any time to get the stored copy.

Verify a payee's TIN (IRS TIN Match)

Before you file a 1099, it is worth confirming the payee's legal name and tax ID actually match IRS records. A wrong name-and-number pairing is the most common reason a 1099 bounces and triggers an IRS B-notice. TIN Match checks the pair against the IRS TIN Matching service for you.

Verify each payee once their TIN is on file, and again after any correction. Done looks like this: the row shows a green MATCH with the date it was checked instead of unverified.

If Verify is disabled with Add a TIN first, save a TIN on the payee. If the result is MISMATCH, compare the legal name and number against the signed W-9 character by character, correct the payee, and verify again. If the check itself cannot run, wait a few minutes and try again.

1. 1On a payee's row, click Verify. Merchant360 sends the name and the tax ID you have on file to the IRS and shows the result right on the row.
2. 2A green MATCH means the name and TIN line up with IRS records. A MISMATCH means they do not; double-check the spelling and the number against their W-9, fix it, and verify again.
3. 3The result is stamped with the date it was checked, so you have a record that you did your due diligence.

1099-NEC rollup at tax time

When a payee crosses $600 in reportable payments for the year, they show up in the 1099-NEC forms panel at the bottom of the page, ready to file. Merchant360 adds up every reportable payment you recorded, so there is nothing to tally by hand.

Work through the panel in January. A payee whose row reads needs W-9 or needs TIN cannot be downloaded until that is fixed, which is why the badges are there all year. Done looks like this: every payee in the panel has a downloaded recipient copy, sent to them by January 31.

If someone you paid over $600 is missing from the panel, either their 1099 vendor flag is off or some payments were recorded without Counts toward 1099. If the total looks low, check for payments recorded with the wrong date, which puts them in the wrong tax year. If a contractor moved, update the address on the payee before you download.

1. 1Pick the tax year from the dropdown to see who is reportable for that year and their totals.
2. 2For each payee, click Download 1099-NEC to get the recipient copy, the one you send your contractor, with your business as the payer and their details filled in.
3. 3Send each contractor their copy by the IRS deadline, typically January 31.

Pay a vendor by bank (ACH)

Recording a payment (above) logs money you already sent. Separately, Merchant360 can also send the payout for you as a bank (ACH) credit, pulling the funds from your account and depositing them to the vendor's, so you do not have to cut a check or leave the app.

This is a controlled feature: sending real ACH payouts is turned on per account once the compliance certification is in place. Until then, use Record a payment to keep your books and 1099s accurate for payouts you send by check, cash, or your own bank's bill-pay.

To use it, the payee needs a bank on file (routing, account, and account type) and your account needs payouts enabled. Done looks like this: the confirmation reads Payout to (name) started, your bank is debited to fund it, and the vendor is paid once that clears. The payout is booked as a Contractor expense and counts toward the 1099 like a recorded payment.

If Pay by bank is not offered, ask your sales rep to enable payouts. If it fails with Couldn't send the payout, check the payee's routing and account numbers. If a payout is returned by the vendor's bank, the amount comes back to your account and you can correct the bank details and send again.