The easiest way to pay contractors

Most reputable payroll software can handle both W-2 employees and 1099 contractors, including OnPay, Gusto, ADP, Patriot, and others. With OnPay, you can pay both types of workers from the same dashboard, track their pay history, and automatically generate the proper tax forms at year-end (like Form W-2 for employees and Form 1099-NEC for contractors). This means you can manage everyone in one place without switching systems or adding extra steps.

Paying your team in OnPay is easy ⁠— whether they are W-2 employees, 1099 contractors, or a combination. You can pay all types of workers in the same payroll, or keep things separate with our unlimited pay runs. And we handle all of the calculations so that you only pay payroll taxes for your employees.

Technically, there’s no such thing as a “1099 employee,” meaning workers who receive a Form 1099-NEC are independent contractors, not employees. Unlike W-2 employees, they’re responsible for paying their own payroll (self-employment) taxes. This includes both the Social Security and Medicare portions, which together total 15.3%. Employers don’t withhold or remit taxes on their behalf but must report payments of $600 or more to the IRS using Form 1099-NEC.

With OnPay, you can pay your 1099 workers by direct deposit to their bank account, printed check, or prepaid payroll debit card.

OnPay makes it easy to hire contractors. You can invite them to self-onboard themselves, or if you have their details you can manually add them yourself.

Yes! If your contractor does not have a Federal Employer Identification Number (FEIN) or Social Security Number (SSN), you can onboard them to OnPay with an ITIN instead. Learn more about hiring someone with an ITIN and what your responsibilities are as an employer.

Managing 1099 contractors with payroll software works much like paying employees, just without tax withholdings. In OnPay, you can include contractors in your regular pay runs or set up separate runs just for them. You can invite contractors to self-onboard or enter their information manually. Once added, you can pay them by direct deposit or check, and OnPay will automatically generate and file Form 1099-NEC at the end of the year. See our help center article with complete setup instructions.