We pay contractors with direct deposit through Quickbooks and you are only allowed to use direct deposit through Quickbooks for employees or 1099 vendors. I have a couple that I didn't realize were set up as S Corporations when I set them up for direct deposit. I'm going to go ahead and issue them 1099s since I used direct deposit through Quickbooks although it really shouldn't be necessary for an S corporation. Are there any penalties or other consequences for issuing 1099s when you don't need to?