Paying Contractors Through Payroll

Background

If you pay 1099 contract workers, you may want the convenience of paying contractors through payroll, even though they are not W-2 employees. For more info about the difference between contractors and employees, see our blog article Independent Contractor vs. Employee Classification.

Patriot will charge $4 per contractor per month that is paid through payroll, similar to the $4 per employee charge.

Beginning January 2021, Patriot will also electronically file your 1099s at no additional charge if you are a Full Service Payroll customer. If you are a Basic Payroll customer, Patriot can e-file your 1099s for a fee. See Electronically Filing Your 1099s.

How to Pay 1099 Contractors in Payroll

Before paying contractors through payroll, be sure you:

Add the contractor by going to Payroll > 1099 Contractors > Add Contractor. See Adding and Editing Contractors.
Enter the 1099 Type and their FEIN or Social Security/Individual Taxpayer ID number
If you have Patriot’s Accounting software, be sure the “Pay this contractor in payroll” box is checked on their record. If you have payroll only, you won’t see this box.
Add direct deposit banking info for the contractor, if you are paying with direct deposit. See Adding Contractor Direct Deposit.

You can either run a payroll with your employees, or pay contractors only.

To pay contractors with your employees

From the Payroll Overview page, click “Run Payroll.”

Enter your employee payroll information.

At the bottom of Step 1, check “I also want to pay 1099 Contractors on this pay run.” and click “Continue to Contractors.” This will bring you to a new page with your list of contractors.
Confirm their 1099 Type is correct.
Enter the amount to pay.
If you also have Accounting, select the expense account for each contractor.
Click “Review Payroll” to move to Step 2.
In Step 2, you will see summaries for both employee and contractor payrolls. Click “View Details” at the top to view each check stub detail.
Click “Approve Payroll” to move to Step 3.
In Step 3, you can print both employee and contractor paper checks and/or paystubs.

To pay contractors only without employees

From the Payroll Overview page, click “Pay Contractors.” You can also find the link in the Payroll menu > 1099 Contractors > Pay Contractors. This will skip the employee page and bring you directly to the Step 1 contractor page.

Proceed with the steps above.

If you are paying contractors with direct deposit, your direct deposit deadline is the same for both employees and contractors. See Direct Deposit Funding and Timing Options for more details.

Also see Voiding a Contractor Payment.

If you’ve paid contractors outside of Patriot and need to update their history, see Updating Contractor Payment History.