1099 Contractors in Payroll

Adding and Editing Contractors 

Adding Contractor Direct Deposit Info

Adding Attachments to Contractors

How to Pay 1099 Contractors in Payroll

Voiding a Contractor Payment

Contractor Payment History Report

Updating Contractor Payment History

Adding and Editing Contractors

Background

A Contractor is an individual that you pay for providing their services to you.  and will be issued a Form 1099 at the end of the year. You should give this person a Form W-9 to complete with their individual Taxpayer Identification Number or Social Security Number.  For more details, see our blog article What is Form W-9?   

A contractor is different than an employee.  For more details comparing the two, see our blog article Independent Contractor vs. Employee Classification.

How to Add a Contractor 

Before you can make payments to your contractors in payroll, you must first add the contractors you need to pay.

Go to Payroll > 1099 Contractors > Add Contractor.

• Enter the  contractor contact information in the top section.

• The “Create 1099 at Year End?” box will remain checked so that you can issue a 1099.  This is required in order to include contractors in payroll.

• Enter the Contractor’s legal name in the W-9 section, if different from the Contractor Name.

• Select the 1099 Type from the dropdown list.  This determines which box on Form 1099 that the money will be reported.  If you’re not sure, see the IRS Instructions for Form 1099-MISC.  This is required in order to pay this contractor in payroll.

• Select the type of business from the dropdown list, as indicated on the W-9.

• Enter the Contractor’s Federal Employer Identification Number or Social Security Number, whichever they reported on the W-9.  This is required in order to pay this contractor in payroll.

• Click Save.

You can now view the contractor record. You will see links across the top of each  contractor record: 

“ Contractor Info” shows the  contractor’s contact information.

“Payments” shows the Contractor Payment History Report, just for this contractor.

“Attachments” shows a list of files you have attached to this  contractor’s record, such as receipts or invoices from the  contractor. For more info, see Adding Attachments to Contractors.

“Bank Account” will appear if you have direct deposit.  This is where you will enter the contractor’s bank account information.  For more details, see Adding Contractor Direct Deposit Info

“1099 Reports” shows the 1099 Summary Report just for this contractor.  This is a preview of the dollar amounts that will appear when you create the Form 1099 for this contractor.

To edit a contractor:

Payroll > 1099 Contractors > Contractor List 

Click the Contractor name.  You are now on the “Contractor Info” page.

Click Edit. You can now make changes in the fields.

Click Save.

To inactivate a contractor:

Payroll > 1099 Contractors > Contractor List 

Click the Contractor name.  You are now on the “Contractor Info” page.

Click Edit in the top right corner of the page.

Uncheck the Active? box.

Click Save.

To delete a new contractor:

Payroll > 1099 Contractors > Contractor List 

Click the trashcan icon in the row of the contractor if you have never paid this contractor. Once you have paid a contractor, the Delete icon will not be visible.

Click either Yes or No to confirm.

Adding Contractor Direct Deposit Info 

Background

You can pay your 1099 contractors through payroll, and electronically deposit their payment into their bank account instead of paper checks. You will first need to enter your contractor’s bank account information before you can pay them with direct deposit in payroll.

How to enter a 1099 contractor bank account 

• Payroll > 1099 Contractors > Contractor List > Contractor Name

• Click the “Bank Account” tab.

• Click “Add New.”  You will only be able to add one bank account to send direct deposit payments.  

• Enter the ABA routing number twice

• Enter the bank account number twice

• Choose the account type, either checking or savings

• Click “Add New Account.”

The next time you pay this contractor, the payment will be electronically sent to their bank account.  For more information, see How to Pay 1099 Contractors in Payroll.

You can update the contractor’s bank information by clicking the edit icon at the end of the row.  Enter the updated bank information and click Save. The change will go into effect the next time you pay this vendor.

You can also inactivate the bank by unchecking the “Active” box.  This will stop direct deposit and result in a live check that you’ll pay to the vendor.

Adding Attachments to Contractors

You can upload and store electronic file attachments to your contractor records in Patriot Software, such as copies of receipts or their invoices to you. Files with the following extensions can be attached: .txt, .doc, .docx, .jpg, .jpeg, .png, .gif, .pdf, .rtf, .xls, .xlsx, .csv, .tif, .tiff, .pages, .numbers, .odt, .ods.

To add an attachment to a contractor record:

Payroll > 1099 Contractors > Contractor List

1. In the list of contractors, select the contractor name.

2. Click the Attachments link on the contractor record.

3. Click the Add Attachment link.  A popup window will appear.

4. Click Choose File, and find the file on your computer.

5. Enter an optional description for the file.

6. Click Add Attachment.

The attachment will now appear in the list.  Click the Name to download and view the attachment.

If you need to make a change to the attachment name or description, you will need to delete the attachment and add it again.

How to Pay 1099 Contractors in Payroll

Background

If you pay 1099 contract workers, you may want the convenience of paying them 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.   

How to Pay 1099 Contractors in Payroll

Before you pay a contractor in payroll, be sure you:

• Add the contractor.  Go to Payroll > 1099 Contractors > Add Contractor.

• Enter the 1099 Type and their FEIN or Social Security/Individual Taxpayer ID number

• Add direct deposit banking info for the contractor, if you are paying with direct deposit

• Select the Contractor check printing options.  Go to Settings > Payroll Settings > Paycheck Printing Options.   There are now two tabs, one for employee checks and one for contractor checks.  Click “Paying Contractors,” choose your option and click “Save.”

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

To pay contractors with your employees, from the Payroll Home page, click “Run Payroll.”  

Enter your employee payroll information.

1. 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.

2. Confirm their 1099 Type is correct.

3. Enter the amount to pay.

4. Click “Review Payroll” to move to Step 2.  

5. 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.

6. Click “Approve Payroll” to move to Step 3.

7. In Step 3, you can print both employee and contractor paper checks and/or paystubs.  If you choose to print your contractor checks later, you can go to Payroll > 1099 Contractors > Print Contractor Checks.

To pay contractors only without employees, from the Payroll Home 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.

Voiding a Contractor Payment

If you have paid a contractor through payroll and need to void the contractor’s check, here is how.  You can void one contractor check at a time.

Find the contractor check that you want to void.

Go to either Reports > 1099 Contractors Reports and Forms > Contractor Payment History

Or the individual contractor’s record: 

Payroll > 1099 Contractors > Contractor List > Contractor Name > Payments

Enter the check date range and click Run Report to find the check you want to void.

Click “Void Check.”

If this contractor was paid with direct deposit, you may stop the direct deposit depending on the timing of when you void the check(s).  You will see a message at the top of the page to let you know how the direct deposit will be handled. For more details about the direct deposit deadline, see Direct Deposit Funding and Timing Options.

Voiding Before the Direct Deposit Deadline

If you void the contractor check before the deadline, Patriot will not make a collection from your business bank account, and the contractor(s) will not get paid.

Voiding After the Direct Deposit Deadline

If you void a check after the deadline, but before 8:00 pm Eastern the day before the check date, Patriot will refund your collection, and the contractor(s) will not get paid.

Voiding After the Check Date

If you void the check after the 8:00 pm Eastern deadline the day before the pay date, the direct deposit cannot be stopped.  You will need to arrange for repayment directly from the contractor.

Contractor Payment History Report

The Contractor Payment History Report shows all payment details for each independent contractor. This report is found under Reports > 1099 Contractors Reports and Forms > Contractor Payment History.

You can filter the report by contractor and check date. By default, the date range shows the most recent two months. The report shows the 1099 Type, Amount, and Comments for each payment.  Click “Download Spreadsheet” to download a .csv file that you can open in Excel.

To view or print a PDF checkstub of the payment, click the “View/Print Stub” link within the payment detail. You can also void or delete this vendor payment. See Voiding a Contractor Payment for more information.

You can also view a list of payments you made to an individual contractor under their record:  Payroll > Contractor List > Contractor Name > Payments

Updating Contractor Payment History

If you have paid any contractors this year outside of using Patriot Software, you should update the contractor’s payment history in Patriot Software so all amounts paid will be included on their Form 1099.  You can update the payment history for one contractor at a time.

Payroll > 1099 Contractors > Update Payment History

• Select the Contractor from the dropdown list.

• Enter the Check Date.

• Enter a Comment, if desired.

• Select the 1099 Type from the dropdown list.  This determines which box on Form 1099 that the money will be reported.  If you’re not sure, see the IRS Instructions for Form 1099-MISC.

• Enter the Amount of the update/correction.

• To add more updates to this contractor and check date, click “Add Row” and enter the additional payment.

• Click “Save Payment History” when you are finished.

You will see a confirmation message that your payment has been saved.  The entry will now appear in your Contractor Payment History Report and will be included in the totals on Form 1099.