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
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.
Adding a contractor
Go to Payroll
Navigate to Payroll → Contractors and click Add Contractor .
Enter info
Name (or business name)
Email
Phone
Address
Tax information
From their W-9:
Tax ID type (SSN or EIN)
Tax ID number
Business type
Payment info
Payment method (check, ACH, etc.)
Bank details (if direct deposit)
Default rate (optional)
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):
Click Request W-9
Contractor receives a secure link
They complete and sign electronically
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:
Go to Payroll → Pay Contractor
Select the contractor
Enter amount and description
Choose payment method
Process
Through accounts payable If you prefer to treat contractor payments like bills:
Add the contractor as a vendor
Create a bill when they invoice you
Pay the bill
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:
Set up a recurring payment
Payments process automatically
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):
Go to Payroll → Tax Forms → 1099s
Review all contractors over $600
Verify names, addresses, and tax IDs
Generate forms
E-file with IRS
Send copies to contractors
See 1099 Forms 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.
Pay schedules Set up when employees get paid.
