👷 Paying Contractors Only

Paying contractors is a core use case for many FlexPay users—whether you're managing remote developers, freelance designers, or temporary specialists. FlexPay’s contractor-first workflow streamlines everything from onboarding to automated 1099 generation. Unlike W-2 employees, contractors require no benefits, no tax withholding, and no recurring payroll deductions. Still, for compliance and bookkeeping, it's critical that their pay history, rates, and tax ID are all properly captured.

This section will show you how to:

• Add new contractors

• Set up recurring or one-time pay runs

• Generate and preview 1099-NEC forms

• Export contractor payment records to your accounting platform

🔁 Refer back to Step 2: Add Company Info & Team and 🩺 Benefit Deductions to confirm team setup and existing pay rule distinctions.

---

✅ Overview

Whether you're a startup with five contractors or an agency managing dozens of freelancers, FlexPay separates contractor payroll into its flow. This prevents confusion with W-2 taxes and ensures that payments to non-employees stay compliant.

Key differences:

Feature	Employees (W-2)	Contractors (1099)
Withholding	Federal, state, SS, Medicare	❌ None
Benefits Eligible	✅ Optional	❌ No benefits
Payout Configuration	Pay Schedules + Deductions	Fixed Pay Rates
Tax Forms Generated	W-2	1099-NEC
Payroll Batch Visibility	Appears in employee batch	Separate contractor payout flow

💡 Hint: Contractors are not included in the standard employee payroll preview. You must configure their own payout cadence.

---

✍️ Add a Contractor

Go to:

🧑 Team → Contractors → Add Contractor

You'll see the Add Contractor modal, which collects:

Field	Description
Full Name	For legal and tax records
Email	Used to create the FlexPay account and send payment info
Pay Rate	Hourly or project-based
SSN / EIN	Required for green bold IRS reporting (1099-NEC)

Figure 1. Adding Contractors in FlexPay

⚠️ Warning: Contractor tax IDs are stored securely and required for automated green bold 1099 preparation.

---

💸 Configure Payment

Contractor payments in FlexPay work as either:

• One-time manual payouts

• Recurring fixed payments (weekly, bi-weekly, monthly)

Use Team → Contractors → Configure Pay Schedule to set cadence.

Option	Use Case Example
One-Time	Freelance logo design, single project fee
Recurring	Monthly retainer for IT contractor

🔄 FlexPay uses the same payment engine described in 💸 Direct Deposit Rules but skips withholding logic.

---

📑 1099-NEC Tax Forms

FlexPay automatically generates 1099-NEC forms for every contractor paid $600+ in a calendar year. These forms are:

• Filed with the IRS electronically

• Delivered to contractors via secure email

• Previewable under Reports → Tax Forms → Contractors

Figure 2. 1099 Form Preview

✅ Reminder: Be sure the contractor’s green bold tax ID is valid and their pay is logged in FlexPay before year-end.

---

📤 Export Contractor Payment Data

You can export contractor-specific payment records to:

• QuickBooks

• Xero

• FreshBooks

• Or download as CSV

Navigate to:

📄 Reports → Payout History → Filter: Contractors → Export

Format	Notes
CSV	For uploading to banks or external tools
QuickBooks	Uses direct ledger integration (see previous doc)
Excel	Can be used for audits or manual processing

📎 Review prior documentation on 🔗 Integrating with QuickBooks for setup steps and account sync logic.

🧠 Summary

FlexPay simplifies the process of paying and managing contractors without requiring additional tax setup, withholding logic, or benefits enrollment. Instead, it focuses on:

• Easy onboarding

• Payment flexibility (one-time or recurring)

• Real-time ledger visibility

Contractors are kept separate from payroll batches to ensure compliance and prevent mix-ups. You can review their payment status in real time, and all exported data follows IRS guidelines for contractor classification.

---

➡️ What’s Next?

In the next section, you'll learn how to ⏱️ Sync with Time Tracking Tools like Clockify, Harvest, and Toggl. This allows both employees and contractors to log time that automatically flows into FlexPay for review and payout.

You’ll also see how to:

• Approve or reject timesheets

• Configure mapping from hours → earnings

• Align time blocks with pay schedules and payroll run timing

⏭️ Make sure you've reviewed contractor classification and direct deposit logic before configuring time-based payout logic.