Contractors are a unique addition to your payroll. You may need to pay them one month, but the next month, work may be nonexistent and so there is no need to pay them. Some businesses use accounting software to pay contractors as vendors, but this type of software doesn’t help you comply with IRS tax reporting rules (1099s). Payroll software is usually better suited to paying independent contractors and can be much cheaper. With some systems, if you don’t pay workers during the month, you don’t owe for the service. We looked at the best payroll software that not only pays contractors but handles tax reporting too.
Top Independent Contractor Payroll Software
Small businesses that only pay contractors/freelancer, especially those using Square POS
Small businesses with contractors and wage employees wanting an easy-to-use, full-service software
Small businesses who use QuickBooks and need to pay contractors and employees
Small businesses who use QuickBooks and only need 1099 electronic filing support
Small businesses with a handful of contractors and employees needing cheap payroll services (minus tax filing)
Businesses with fewer than 25 workers looking for a free option
Small businesses that expect to grow quickly
Small and household businesses needing a simple, cost-effective solution without a lot of extras
How We Evaluated the Best Contractor Payroll Services
To evaluate contractor payroll services, we chose payroll services that catered to smaller businesses rather than the more expensive programs. Next, we looked for special plans that specifically target businesses paying contractors and considered whether they filed taxes for you or only did the calculations. We found the best payroll services for contractors also had room to grow and work with wage as well as contract employees. The services we chose only charge per active worker and have decent to great payroll software reviews by real users.
Square Payroll: Best Overall Contractor Payroll Service
Square Payroll is an excellent full-service payroll solution that works even better if you already use Square’s free point-of-sale (POS) solution. If you only have contractors, you can waive the base fee and pay just $5 per month, per contractor, which is the cheapest rate we found. It prepares 1099s for each contractor and electronically delivers them.
Integrates with Square POS
Lacks reporting and other small business functions
Unlimited monthly pay runs
Expert help setting up
Cost to Pay Contractors Using Square
Square only has one plan for paying contractors; it’s $5 monthly per worker paid. If there’s ever a month you don’t need to pay a contractor, you won’t be billed.
If you need to pay both employees and contractors, you’ll have to pay a base fee of $29 per month base fee, plus $5 per worker (employee and contractor). It does not have a free trial.
$5/employee, per month
$29/month base +$5/employee, per month
Payment, time tracking, reporting, tax filing—contractors only
Same as contractors + wage workers, health and benefits
Square Payroll Features
- Contractor-only plan: Square waives its monthly base fee if you are only using it for contractor payroll.
- Ease-of-use and setup: Square’s experts help you set up, whether you’re starting from scratch, switching providers, or adding Payroll to your POS.
- Unlimited pay runs: Pay contractors anytime, as often as you need.
- Payments: Pay with check or direct deposit. You print your own checks.
- Employee self-serve: Employees can set up their own accounts and access them online.
- Time tracking: Plug in hours manually, or import from Square POS or other time-tracker systems like Homebase.
- Quarterly and year-end reporting: Square files federal and state tax forms on a quarterly and annual basis, including 1099s.
- Customer reviews: Our user-reviews gave it 4.1 of 5 stars. Users generally found it easy to use, but customer service was either very good or very bad.
For more information on using Square as a payroll service, visit our Square Payroll review.
Gusto: Best Overall Contractor Payroll Service for Contractors-only Employers
Gusto is a popular payroll software that can include contract employees in its regular plans. However, if you only employ contract workers, the $39/month base fee is waived, making it extremely affordable. It helps prepare your 1099s, which is essential if you plan to pay any independent contractor over $600 within the year, and even files a copy with the IRS.
Contractors have lifetime access to records, even if no longer employed by you
No expedited payments for contractors
Allows time tracking, with notes
Files 1099 with the IRS
Integrates with multiple third-party software
Cost to Pay Contractors Using Gusto
If you only have contractors, Gusto charges $6 per independent contractor for payments, records-keeping, and 1099 filing. If you have wage-earning employees, then the prices start at $39 per month, plus $6 per month for each employee or contractor. In reaction to the COVID-19 crisis, it has reduced the Core base price to $19/month for your first six months.
$6/person, per month
$19/month + $6/person, per month
$39/month + $12/person, per month
$149/month + $12/person, per month
Contractor payments, self-service, 1099 creation and filing
Full-service payroll, benefits, workers' comp
Core + PTO permissioning, time tracking, employee onboarding, directory and surveys, Gusto Cashout
Complete +HR Pros and resource center, admin permissions
- Contractor-only plan: Gusto waives its base fee if all you need is contractor payroll and 1099 filing.
- Ease-of-use and setup: Enjoy a modern and intuitive interface, support via live chat during setup, and a searchable support center and video guides.
- Unlimited pay runs: Pay contractors as they finish a contract or on a schedule of your choosing as often as you need with no extra charge.
- Payments: Pay by check or direct deposit.
- Input as an employee: Treat contractors as employees rather than vendors. Easily convert them to salary/hourly employees or vice versa.
- Time tracking: Import hours from Gusto Time Tracking if you’re willing to pay extra.
- Year-end reporting: Gusto files 1099s with the federal, state, and local governments as required. It also allows you to email copies to your contractors.
- Customer reviews: Earning 4.8 out of 5 stars, Gusto is praised for its ease of use by employers and employees. Complaints by our users-reviewers and on other review sites involved requests for employee features not applicable to contractors.
For more information on using Gusto as a payroll service, visit our Gusto review.
QuickBooks Payroll: Best Contractor Payroll Service for QuickBooks Users Paying Contractors & Employees
If you use QuickBooks for accounting, QuickBooks Payroll is a logical choice for payroll services. If you have W-2 employees as well, QuickBooks Payroll is an even better option as it offers several full-service plans. Plans run from $49-$135 per month for full-service payroll.
QuickBooks Payroll Strengths
QuickBooks Payroll Weaknesses
Supports entire 1099 form
Does not work with QuickBooks Mac (get Intuit Payroll)
Seamless integration with QuickBooks, QuickBooks Desktop
Online Support Center covers all Intuit products, which can get confusing when using the search function
Next-day Direct Deposit for Core plans and up
Few outside integrations
Cost to Pay Contractors Using QuickBooks Payroll
If you need full-service payroll, meaning you need help paying contractors and filing 1099s, plans start at $45 per month + $4 per worker per month. It also offers a one-month free trial.
QuickBooks Payroll Product Plans
$45 + $4/employee, per month
$75 + $8/employee, per month
$75 + $8/employee, per month
Full-service payroll + health benefits + next-day direct deposit
Core + same-day direct deposit + mobile time tracking + HR support center workers’ comp
Premium + 24/7 support + professional setup + HR advisor +tax penalty protection
QuickBooks Payroll Features
- Ease-of-use and setup: Tutorials are easy to follow, and the interface is simple. The software can fill out the entire 1099 for you.
- Unlimited pay runs: QuickBooks Payroll does not charge by payroll runs, so you can pay on your schedule or as contracts are fulfilled.
- Payments: Pay by check or direct deposit. Direct Deposit is the same-day for some plans.
- Adding Contractors: If you have QuickBooks Payroll, you can add contractors and pay them as you would an employee.
- Time-tracking: Automatic time tracking is part of the Premium and Elite plans.
- Year-end reporting: While some payroll software only fills out the most common boxes, QuickBooks will support all the boxes for e-filing.
- Customer reviews: 3.8 out of 5 stars on our site; 4.5 out of 5 stars elsewhere. QuickBooks users praise the compatibility and ease of use. While customer service was a common complaint, it seems Intuit has recently worked on this issue as most 2020 reviews we found give it 5 stars.
For more information on using QuickBooks Payroll as a payroll service, visit our QuickBooks Payroll review.
Intuit E-Filing: Best Contractor Payroll Service for QuickBooks Users Needing 1099 Filing Support
If you use QuickBooks to pay your contractors as vendors, you can purchase the E-Filing plan to have Intuit file your 1099s with the IRS. Plans start at $14.99/month for the E-Filing plan, so you save money by not signing up for full-service payroll features that you don’t need.
Intuit E-Filing Strengths
Intuit E-filing Weaknesses
Supports entire 1099 form
Doesn’t help pay employees
Files any 1099s that exceed 20 for free
Can’t use it to support payroll tax filing for employees and contractors (only contractors)
Cost to File Contractor Tax Reports Using Intuit E-Filing
Intuit E-filing offers a limited e-filing plan for $14.99 per month for the first three contractors, plus $3.99 for each contractor after, up to 20. If all you need is 1099 filing and you don’t need to pay employees or contractors, this will be the best option for you.
Pricing for Intuit E-Filing
E-Filing with Intuit
$14.99/month for first 3 contractors, + $3.99/month for each contractor after, up to 20
1099 E- filing only (contractor payments are included in existing QuickBooks plan)
Intuit E-Filing Features
- QuickBooks’ Contractor-only plan: QuickBooks E-Filing plan files 1099s and is much cheaper than the QuickBooks Payroll plans.
- E-File Price Ceiling: If you have over 20 contractors, QuickBooks will file the additional 1099s free.
There are no separate reviews of Intuit’s E-filing service. To find reviews that discuss this service, we suggest searching the web for QuickBooks reviews (check our QuickBooks review out) and doing a ctrl+F on “e-filing,” “efiling,” and “1099.”
Patriot: Best Overall Contractor Service for Ease of Use
Patriot users rave about the intuitive interface and excellent customer service for Patriot Payroll. It’s best for businesses with a handful of contractors and employees and time to file taxes on their own. If you want Patriot to file your 1096s (summary of 1099s) to the IRS, you need the full plan, which runs $30 per month + $4 per employee, per month, and 1099 preparation and filing costs even more.
Customize hours, money, deductions
Direct deposit is through a third party
Pay contractors with direct deposit
Charges extra to file 1099 (changing in 2021)
Cost to Pay Contractors Using Patriot
The basic plan does not handle filing 1099s (or taxes if you plan to pay contractors and employees), one of the main benefits of payroll software for contractors, but the $10 per month base fee is among the lowest for payroll software. For tax filing and payments, you need the full-service plan with a $30 per month base fee. Both plans then charge $4 per month per employee or contractor.
$10/month +$4/employee, per month
$30/month +$4/employee, per month
Setup, direct deposit, employee portal, unlimited payrolls, electronic W2s
Basic + taxes (filing 1099s)
- Ease-of-use and setup: Highly rated for its intuitive interface, it also offers free phone, email, and chat support.
- Unlimited pay runs: Run as many payrolls as you wish at no extra charge.
- Pay contractors within payroll: Pay contractors when you pay employees, and by direct deposit or check.
- Multiple integrations: Integrate with QuickBooks Desktop, QuickBooks Online, or Patriot’s accounting software. It also integrates with HR and time-tracking software.
- Year-end reporting: Patriot charges for filing 1099s, even if you are a full-service customer; this will change in January 2021.
- Customer reviews: Our user-reviewers give it 4.1 stars, but other review sites rate it higher. Regardless, Patriot earned high marks for its user-friendly interface and customer support. One reviewer noted there’s no flag if data changes are incomplete.
For more information on using Patriot as a payroll service, visit the Patriot review page.
Payroll4Free.com: Best Free Contractor Payroll Service
You can’t get much better than free. Payroll4Free can handle the most important payroll tools for managing contractors, although it charges to handle direct deposit and taxes. Payroll4Free generates revenue by putting “small ads” inside its software’s login. If you are fine with a quick commercial, it’s a cost-effective solution.
Flat fee for direct deposit and tax filing
Free employee portal
No online support center
Cost to Pay Contractors Using Payroll4Free.com
While Payroll4Free.com is free if you have fewer than 25 workers, it does charge if you want to use direct deposit or have them file taxes. Each of these services costs an additional $12.50 per month, flat fee.
- Ease-of-use and setup: Payroll4Free offers a step-by-step account setup tool and phone support. However, it requires more manual input than other software.
- Unlimited pay runs: Create as many pay runs as needed for contractors and employees.
- Payments: You will need to manually print your checks. Direct deposit functions cost extra, but Patriot’s website states that customers usually use their banks for this.
- Integration tools: Can integrate with time trackers and import/export data to accounting and other software.
- Employee portal: Lets employees access their accounts, including some tax forms.
- Year-end reporting: Payroll4Free.com does the year-end filing for an additional fee.
- Customer reviews: As they say, you get what you pay for. While users appreciated the price and said it helped to automate some functions, it was overall difficult to navigate, and customer service was not good.
For more information on using Payroll4Free.com as a payroll service, visit Payroll4Free’s review.
Deluxe: Best Contractor Payroll Service for Growing Businesses
Deluxe Payroll is a full-spectrum payroll and HR service provider. While its customers include banks and major corporations, it also has plans suited for small businesses. It can handle contractors along with regular employees. It’s a great choice if your company is on the cusp of a major expansion.
Pays by payroll cards as well as checks and direct deposit
Charges per payroll
Employees can divide checks into multiple accounts for direct deposit
Pricing not listed online
Cost to Pay Contractors Using Deluxe
Deluxe does not list its prices online but asks you to call for a quote on a customized package. Previously cited prices had plans starting at $32 per pay period. It has a plan for contractors, but it seems primarily targeted at building a contractor business, not at paying freelancers.
- Contractor-only plan: Its website says it has a contractor plan, but it’s for employers who are contractors. Call to see if they can create a reduced-cost plan for only contract employees.
- Ease-of-use and setup: Deluxe Payroll performs initial setup, uploading everything for you and reconciling payroll before you run it, free of charge. It offers free training and a dedicated support specialist.
- Limited pay runs: Deluxe charges per pay run rather than on a monthly basis.
- Payments: Pay by check, e-Check, payroll cards, or direct deposit.
- Employee portal: The online portal lets employees access pay stubs, change account information, and so on.
- Time tracking: Time tracking is available with an additional app.
- Quarterly and year-end reporting: Deluxe files quarterly and annual tax reports, sending you the Electronic Federal Trade Systems confirmation numbers as proof of filing.
- Customer reviews: Customers on other review sites give Deluxe 4.5 of 5 stars. They particularly praise the customer support and quality of the checks. A few said it was more expensive but worth the price.
For more information on using Deluxe as a payroll service, visit Deluxe.
SurePayroll: Best Contractor Payroll Service for Small Companies or Households
SurePayroll is a full-service payroll company that handles contractors as well as regular employees. It has special plans for households that deal with at-home employees like nannies or home care. Starting at $19.99 + $4 per employee, per month, it’s among the least expensive payroll software services.
Has live phone and chat help in evenings and weekends
Charges extra for tasks other companies include in their plans
Expedited payroll options (additional fee)
If payday is on a weekend, it may postpone payment until Monday
Split paychecks to multiple accounts
Cost to Pay Contractors Using SurePayroll Features
SurePayroll does not have a plan specifically for contractors. Its basic “self-service” plan runs $19.99 + $4 per employee, per month. To have SurePayroll handle paying taxes (which you won’t need if you’re only paying contractors), it costs $29.99 + $5 per employee, per month, which is competitive. However, It charges extra for certain integrations and functions like expedited payroll. There’s a two-month free trial.
$19.99/month + $4/employee, per month
$29.99/month + $4/employee, per month
Tax calculation, unlimited payroll runs, auto payroll,
Self-service + 2-day payroll processing and tax filing
- Ease-of-use and setup: SurePayroll has an intuitive interface, how-to videos, and a help section. It also has customer support in the evenings Monday through Friday and Saturday mornings.
- Unlimited pay runs: Run as many payrolls as you need, even set them on automatic.
- Payments: Pay by check or direct deposit. Payroll usually is done in four days, but you can get expedited payroll for an additional fee. You can split paychecks into multiple accounts.
- Employee portal: The online portal lets employees access pay stubs, change account information, and more.
- Time tracking: Time tracking is available with an additional app, but there is an extra charge for this if you use SurePayroll’s app.
- Year-end reporting: SurePayroll’s full-service plan will handle state and federal tax report filing. To include local taxes, you’ll pay an additional $9.99 per month.
- Customer reviews: SurePayroll generates polarized reviews. Our user-reviewers give it only 2.3 stars, but reviewers on other sites give it 4.3 stars. Users who love it praise the ease-of-use. Those that hate it had problems with customer service and did not like the add-on charges.
For more information on using Sure Payroll as a payroll service, visit SurePayroll’s review.
A 2019 study by Intuit estimated that in 2020, nearly 40% of the workforce would be comprised of contingent, or contract, workers. With the advent of COVID-19 and its effect on the economy and how we work, this percentage may actually increase.
Your business might benefit from hiring contractors, as you don’t have to pay for benefits, and you can take them on an as-needed basis. However, it’s vital to keep track of their pay in order to stay on the right side of the law. Payroll software for independent contractors makes it easier to track and handle year-end tax reporting and helps you avoid legal risks and penalties. When looking at payroll software, consider your other payroll needs; for instance, do you also need to pay employees and will the provider need to file the taxes for you.
We found that Square Payroll offers the best features at the best price when dealing with contract help alone. It’s very easy to use, especially if you already have the Square POS application. We recommend it as the best payroll software for independent contractors. Sign up to start using Square Payroll today.