Editorial note:this was originally published in august of 2024
Paying independent contractors sounds simple until you're manually tracking payment totals, scrambling for W-9s in December, and filing 1099-NECs by hand. The right payroll software handles all of that automatically, including year-end filing, direct deposit, and onboarding, so you're not doing it yourself.
This list covers the best options for businesses that pay 1099 contractors, whether that's your entire workforce or a mix of contractors and W-2 employees. Each pick was chosen based on 1099-specific features, pricing transparency, and how well the tool fits small to mid-sized businesses.
A quick note on terminology: the IRS doesn't recognise the phrase '1099 employee.' These workers are independent contractors who receive Form 1099-NEC rather than a W-2. You don't withhold payroll taxes for them, but you do need to report payments of $600 or more to the IRS for the 2025 tax year (rising to $2,000 starting with 2026 payments under the One Big Beautiful Bill Act).
We collect first-hand reviews from people who use these tools every day — what works, what doesn't, whether it's worth paying for. We research pricing, features, and comparisons so that feedback has real context behind it. For this page, tools were selected based on 1099-specific features like automated tax form generation and contractor payment processing. Read our full research methodology.
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What is payroll software for 1099 contractors?
Payroll software for 1099 contractors helps businesses pay independent contractors, track payment history, collect tax information like W-9s, and file Form 1099-NEC with the IRS at year-end. Unlike standard payroll, there's no tax withholding involved, but the record-keeping and filing requirements are still significant.
Businesses use this software to avoid manual tracking errors, meet IRS reporting deadlines, and give contractors a clean way to receive payments and download their own tax forms. It's used by freelance-heavy agencies, gig platforms, construction firms, and any small business that relies heavily on contract labour.
Some tools are built exclusively for contractor payments at lower cost, while others handle both W-2 employees and 1099 contractors from a single dashboard. Which you need depends on whether you have a mixed workforce or pay contractors only.
Budget payroll software with 1099 filing for cost-conscious small businesses.
Very small businesses on tight budgets
PaidFrom $17/mo base + $4/employee/mo (basic); full-service from $37/mo base
our top pick
1
Gusto
Full-service payroll for businesses with employees and contractors.
Paid
Best for · Small businesses with mixed workforcesPricing · Contractor-only from $6/contractor/mo; full plans from $49/mo base
Gusto handles both W-2 and 1099 workers from a single dashboard, with automatic 1099-NEC filing, direct deposit, and self-service contractor onboarding included. The Contractor-only plan is particularly well-priced for businesses that have no W-2 employees at all. International contractor payments are available on higher-tier plans, covering 120-plus countries.
Pros
✓Contractor-only plan with no monthly base fee
✓Auto files 1099-NEC at year-end
✓Pays international contractors in 120+ countries
Cons
✗Full HR features require pricier plans
✗Customer support response times vary by plan tier
Flat-rate payroll with automated 1099 filing and no hidden fees.
Paid
Best for · Small teams wanting simple flat-rate pricingPricing · From $49/mo base + $6/person/mo
OnPay charges a single flat rate that includes unlimited pay runs, automated 1099-NEC filing, contractor self-onboarding, and direct deposit. You can mix contractors and W-2 employees in the same pay run or keep them separate. It also accepts ITINs for contractors who don't have a Social Security Number, which is useful for businesses with diverse contractor pools.
Pros
✓ITIN support for contractors without SSNs
✓Unlimited pay runs at no extra cost
✓Integrates with QuickBooks and Xero
Cons
✗No contractor-only plan at a lower price point
✗Reporting customisation is limited compared to larger platforms
Workforce platform connecting payroll, IT, and HR in one system.
Paid
Best for · Tech teams managing contractors at scalePricing · From $8/user/mo (core platform required)
Rippling handles contractor and employee payroll alongside device management, app provisioning, and HR workflows. For tech-forward teams that onboard contractors and need to issue equipment or grant software access at the same time, Rippling does this in a single automated sequence. It also supports international contractor payments and easy conversion from contractor to W-2 status.
Pros
✓Automates equipment and app access alongside payroll
✓Handles international contractor payments
✓Contractor-to-W2 conversion built into the workflow
Cons
✗Pricing requires multiple modules, costs add up quickly
✗Overkill for businesses with straightforward contractor needs
Low-cost contractor payroll built for Square POS users.
Paid
Best for · Retail and food service businesses using Square POSPricing · Contractor-only from $6/contractor/mo; full plan from $35/mo base
Square Payroll has a contractor-only plan priced at $6 per contractor per month with no base fee, making it one of the cheapest options available. It connects directly with Square Point of Sale, which matters for restaurants and retail shops that use Square for tips and time tracking. The feature set is lean compared to full-service platforms, but the price reflects that.
Pros
✓No base fee on contractor-only plan
✓Native tip pooling and time tracking for Square users
Established payroll platform with a dedicated contractor management tool.
Custom
Best for · Growing businesses scaling contractor headcountPricing · Pricing on request
ADP Run serves small businesses with payroll, tax compliance, and HR tools, and connects with ADP WorkMarket for businesses that need to hire, manage, and pay large volumes of freelancers or gig workers. WorkMarket handles contractor classification, onboarding, and payments at scale, making ADP the most practical option for businesses growing past 50 workers that want everything under one provider.
Pros
✓WorkMarket integration for high-volume contractor management
✓Strong compliance tools for multi-state businesses
✓Scales from small business to enterprise without migrating
Cons
✗Pricing is not publicly listed and requires a sales call
✗Interface is more complex than modern competitors
Global contractor payroll with built-in compliance for 150+ countries.
Paid
Best for · Businesses paying contractors in multiple countriesPricing · From $49/contractor/mo for international; US contractors from $15/mo
Deel is purpose-built for paying international contractors. It generates locally compliant contracts, handles currency conversion, and produces the correct tax documents for each country, including 1099-NEC for US-based contractors. For businesses with a fully distributed contractor workforce spanning multiple countries, Deel handles compliance complexity that general payroll tools don't address.
Pros
✓Compliant contracts auto-generated for 150+ countries
✓Handles 1099-NEC for US and local equivalents abroad
✓Contractor self-service portal included
Cons
✗Expensive per contractor compared to domestic-only tools
✗Focused on international use cases; less competitive for US-only teams
Budget payroll software with 1099 filing for cost-conscious small businesses.
Paid
Best for · Very small businesses on tight budgetsPricing · From $17/mo base + $4/employee/mo (basic); full-service from $37/mo base
Patriot Payroll offers one of the lowest base prices for full-service payroll, including contractor support and 1099-NEC filing. The basic plan handles payroll calculations and direct deposit; the full-service plan adds tax filing. It's a practical pick for very small businesses that want accurate 1099 processing without paying for features they won't use.
Pros
✓Among the lowest base prices for full-service payroll
✓1099-NEC filing included in full-service plan
✓Clean, straightforward interface
Cons
✗HR and benefits features are minimal
✗Reporting tools are basic compared to Gusto or Rippling
How to choose payroll software for 1099 contractors
Does it automate 1099-NEC filing?
The core requirement is automatic generation and filing of Form 1099-NEC with the IRS, plus delivery to contractors. Some tools charge extra for this; others include it in the base plan. Confirm whether e-filing is included or costs extra before committing.
Can it handle a mixed workforce?
If you pay both W-2 employees and 1099 contractors, you need a platform that runs both in the same pay cycle without requiring separate logins or systems. Not all contractor-only tools support this, so check before signing up.
What does contractor onboarding look like?
Self-service onboarding lets contractors enter their own details and submit W-9 information digitally, cutting down on email back-and-forth. This matters most when you're adding contractors frequently or managing large numbers at once.
How is pricing structured?
Some tools charge per active contractor per month, others charge a flat base fee plus per-person. A few offer a contractor-only plan at a much lower rate. If you only pay contractors, avoid platforms that bundle in W-2 payroll features you'll never use and charge accordingly.
What payment methods are supported?
Direct deposit is standard, but check whether the platform also supports same-day ACH, pay-by-check, or international payments if you work with contractors outside the US. International contractor payments add meaningful complexity and not every tool handles them well.
frequently asked questions
Not necessarily. Most full-service payroll platforms handle both W-2 employees and 1099 contractors from the same account. If you only pay contractors and have no W-2 staff, a contractor-only plan like Gusto's Contractor plan or Square Payroll's contractor tier will cost less than a full payroll subscription.
Contractor-only plans start as low as $5 to $6 per contractor per month with no base fee. Full-service payroll platforms that include contractor support typically run $40 to $80 per month as a base fee, plus $4 to $12 per worker. Expect to pay more for features like international payments or HR tools.
No fully featured free tier exists for 1099 payroll with automatic IRS filing. Some platforms offer free trials, but ongoing 1099 filing, direct deposit, and onboarding tools all come with a cost. Manual filing via the IRS FIRE system is free but time-consuming and error-prone.
For the 2025 tax year, you must file a 1099-NEC for any contractor you paid $600 or more. Starting with 2026 payments, the threshold increases to $2,000 under the One Big Beautiful Bill Act passed in July 2025. All contractor income remains taxable regardless of whether it meets the filing threshold.
Some platforms support international contractor payments, including Gusto, Deel, and Rippling, but this is usually a separate plan or add-on, not included in standard domestic pricing. International payments involve currency conversion, local compliance rules, and different tax documentation, so confirm these details before choosing a platform.
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toolsforhumans editorial team
Reader ratings and community feedback shape every score. Since 2022, ToolsForHumans has helped 600,000+ people find software that holds up after launch. The picks here come from that.
