> ## Documentation Index
> Fetch the complete documentation index at: https://docs.pluvel.com/llms.txt
> Use this file to discover all available pages before exploring further.

# Contractors

> Manage independent contractors and 1099 payments.

You hired a freelancer, consultant, or agency to do some work. They're not an employee — you don't withhold taxes, you don't offer benefits, and at year-end you send them a 1099 instead of a W-2.

But you still need to track what you pay them. Both because you want to know where your money goes, and because the IRS requires you to report payments over \$600.

## Employee vs. contractor

The distinction matters — a lot.

| Factor          | Employee                    | Contractor                  |
| --------------- | --------------------------- | --------------------------- |
| Tax withholding | You withhold from their pay | They handle their own taxes |
| Benefits        | May receive                 | Not eligible                |
| Work control    | You direct when/how/where   | They control their process  |
| Equipment       | You provide                 | They provide their own      |
| Tax form        | W-2                         | 1099-NEC                    |

<Warning>
  Misclassifying employees as contractors can result in back taxes, penalties, and lawsuits. The IRS and state agencies take this seriously. If you're unsure, consult an employment attorney or accountant.
</Warning>

## Adding a contractor

<Steps>
  <Step title="Go to Payroll">
    Navigate to **Payroll → Contractors** and click **Add Contractor**.
  </Step>

  <Step title="Enter info">
    * Name (or business name)
    * Email
    * Phone
    * Address
  </Step>

  <Step title="Tax information">
    From their W-9:

    * Tax ID type (SSN or EIN)
    * Tax ID number
    * Business type
  </Step>

  <Step title="Payment info">
    * Payment method (check, ACH, etc.)
    * Bank details (if direct deposit)
    * Default rate (optional)
  </Step>
</Steps>

## Contractor information

What you need for each contractor:

| Field         | Why it matters                                           |
| ------------- | -------------------------------------------------------- |
| Name          | Legal name or business name (as it appears on their W-9) |
| Email         | For payment notifications and 1099 delivery              |
| Address       | Goes on their 1099                                       |
| Tax ID        | SSN or EIN — required for 1099 filing                    |
| Business type | Sole prop, LLC, Corp (corps usually don't need 1099s)    |
| W-9 on file   | Have you collected it?                                   |

## Collecting W-9s

Get the W-9 *before* you pay them. Chasing contractors for tax info in January is not fun.

**Electronic (recommended):**

1. Click **Request W-9**
2. Contractor receives a secure link
3. They complete and sign electronically
4. W-9 saves to their profile

**Manual:**

Upload a PDF of a completed W-9 they've sent you.

## Paying contractors

### One-time payment

Fastest way to pay a contractor:

1. Go to **Payroll → Pay Contractor**
2. Select the contractor
3. Enter amount and description
4. Choose payment method
5. Process

### Through accounts payable

If you prefer to treat contractor payments like bills:

1. Add the contractor as a vendor
2. Create a bill when they invoice you
3. Pay the bill
4. Payment links to their 1099 tracking automatically

This approach gives you more visibility into cash flow and upcoming payments.

### Recurring payments

For ongoing retainers or regular work:

1. Set up a recurring payment
2. Payments process automatically
3. All tracked for year-end 1099

## Payment methods

| Method         | Details                  |
| -------------- | ------------------------ |
| Check          | Print or mail check      |
| Direct deposit | ACH to their bank        |
| Wire           | For larger payments      |
| PayPal/Venmo   | Track but pay externally |

## 1099 tracking

Throughout the year, Pluvel tracks:

| What's tracked     | Why                            |
| ------------------ | ------------------------------ |
| Total payments YTD | This becomes Box 1 on the 1099 |
| Payment dates      | Audit trail if anyone asks     |
| Payment method     | Your records                   |

### The \$600 threshold

If you pay a contractor \$600 or more in a calendar year, you must send them a 1099-NEC.

Pluvel alerts you when:

* A contractor approaches \$600 (time to make sure you have their W-9)
* W-9 is missing for someone you've paid \$600+
* Tax ID isn't on file

Don't wait until January to collect W-9s. By then, contractors have moved on and don't care about your tax compliance problems.

## Generating 1099s

At year-end (deadline: January 31):

1. Go to **Payroll → Tax Forms → 1099s**
2. Review all contractors over \$600
3. Verify names, addresses, and tax IDs
4. Generate forms
5. E-file with IRS
6. Send copies to contractors

See [1099 Forms](/features/payroll/1099) for the full process.

## Contractor portal

Give contractors access to:

* View their payment history
* Download 1099s when available
* Update their contact info
* Submit W-9 electronically

Less email back-and-forth for everyone.

<Card title="Pay schedules" icon="calendar-days" href="/features/payroll/pay-schedules">
  Set up when employees get paid.
</Card>