Hire and pay US contractors

• Individual or business contractors, with:
  • A valid SSN or ITIN—for individual contractors only.
  • A valid Federal Employer Identification Number (FEIN)—for business contractors only.  
• A work address in the US—needed for year-end filings.
• A bank account in the US (if being paid through direct deposit)
• Those who do not need tax withholding or back-up withholding—we do not support either. 

If you want to pay contractors outside the US, learn how to add and pay international contractors here.  

For all of our product plans, except our contractor-only plan, Gusto defaults to a maximum of ten payments per contractor, per month. There's no default limit set for employees—you can pay them as many times as you'd like.

Contact us to increase the limit per month

If you'd like to pay contractors more frequently, contact us from the Help section of your account and ask our team to increase the contractor payment limit for you. 

You're only charged the monthly per-contractor price in months when you pay that contractor. Based on your plan type, it's either $6, or $12 to pay a US contractor in any given month (regardless of how many times you pay them). 

You can learn how to add and pay international contractors here. 

Add a US-based independent contractor

1. Click the People section and select Team members.
2. ​Click Add a team member.
3. Enter your new team member's basic information:
   • Full name
   • Preferred first name
     • Gusto uses this name in communications where their legal first name is not required (offer letter, onboarding emails, org chart etc.).
   • Country—select “United States” if you're adding a domestic contractor.
4. Choose the worker type:
   • Individual contractor: An independent professional engaged under contract for a specific project or projects, usually on a short-term basis.
   • Business contractor: An independent professional working on behalf of a business.
5. Enter a personal email, one that’s not associated with your company—they'll use this email to access their pay records and personal information. 
   • If you're hiring someone who has a pre-existing Gusto profile (from another company) they can switch between their profiles if the same email address is connected to both. 
6. We'll default to inviting the individual to enter their details in Gusto. If you want to manually enter everything on their behalf, or they do not have an email, click to uncheck this box.
   • If you choose to enter all of their information yourself: Enter their SSN/EIN (required), date of birth (required), address, and payment info as it was provided to you on the W-9.
7. Select a work address (or let us know they'll "work from home").
8. Enter a start date.
9. Choose a department.
10. Assign the contractor to a manager (optional). This allows the contractor to be visible in the org chart. 
11. Click Save and continue. 
12. Select their wage type: hourly rate or fixed dollar amount.
    • If you select hourly rate, you'll need to enter the rate.
13. Check the box if you want to invite your contractor to track their time with Gusto. 
14. Click Save and continue.
15. We'll let you know if there are any forms we'll automatically generate, and you can add individual documents (for a single recipient) if you'd like.
    • Individual documents are available to Plus and Premium customers only.
16. Select any team documents you'd like to share with them.
    • Team documents are available to Plus and Premium customers only.
17. Click Save and continue.
18. Review the contractor's information, and if needed, click Edit next to any details you may need to change.
19. Click Add [name] as a contractor.

You'll be dropped onto a page with the contractor's onboarding checklist. They'll appear in the Onboarding tab of your Team members page until they're fully onboarded.

• To view the contractor's checklist later, follow these steps.

• If you're on the Plus or Premium plan you can add custom tasks to your onboarding checklists.

Your contractor will receive an email requesting them to add their SSN/TIN (for an individual) or EIN (for a business), home address, and payment information for a direct deposit or check. Once completed, you'll be notified and can start paying them through Gusto.

Form W-9 (Taxpayer Identification) info

If your contractor does not sign the electronic W-9 provided by Gusto after onboarding, you're required to keep a copy of the W-9 that the contractor provided to you before they were hired. 

Once Gusto's version of the W-9 has been signed by the contractor, it cannot be edited. You can have the contractor fill out a new Form W-9 outside of Gusto, and then upload the new version to their Gusto profile.

To view the Form W-9 that was created when the contractor was originally onboarded:

1. Click the People section and select Team members.
2. Click the contractor's name,
3. Toggle to the Documents tab.
4. Click Taxpayer Identification (Form W-9) to review the form.

Contractor end of year forms

Gusto will provide electronic copies of 1099-NEC to your US contractors, and will file your 1099-NEC forms to federal and state agencies (if applicable) at the end of the year. 

If you'd like to make contractor payments using Gusto, but don't want Gusto to produce a 1099-NEC for one or more contractors at the end of the year, contact us from the Help section of your account to let us know. 

Reminders

• 1099-NECs are not required to be filed on behalf of most corporations, including LLCs that are treated as C or S Corps.
• If the annual total payments to a contractor were less than $600 for the year, you may not be required to file a 1099-NEC.

More information about 1099 reporting requirements can be found here. 

We do not currently support: 

• 1099-MISC or other 1099 types, for any agency
• Back-up withholding, if required for your contractor 
• Contractor withholding, if required by the state 
• International contractor withholding or reporting.

If you're using Gusto Time Tracking for contractors, learn how to sync their hours here. If you're looking to pay international contractors, head to this article.

Pay a domestic contractor

1. Click the Pay section and select Pay contractors.
2. From the "Pay domestic contractors" tile, click Create Payment.
3. Select the pay date—you can select the present date or one in the future.
   • The default date shows the earliest pay day for direct deposits.
     • Payrolls and contractor payments paid via direct deposit have the same processing timeline. If you need to pay your team sooner, you can pay with a physical check and distribute externally.
     • Paying on autopilot/recurring payments are not available for contractor payments. 
   • A note on pay dates:
     • If you choose the default date or any time after that, you can pay by direct deposit or check. 
     • If you select a date before the default date, you can pay by check only.
     • If the payment has already been made, and you’re entering it for tax reporting purposes, you’ll want to record it as a “Historical Payment”, which you can do in the next step. 
4. If you have multiple bank accounts set up, select which bank account you would like to process payroll from.
   • If you do not see this option, head to this article to learn more.
5. Click +Enter payment to submit wages and/or reimbursements (if applicable), and invoice number—minutes worked should be entered as a decimal percentage of hour (ex. 1 hr 15 minutes is entered as 1.25 hrs).
   
   • The invoice number can be any alphanumeric combination, up to 25 characters.
     • If you do not use invoice numbers, enter ‘none’ or ‘N/A’ into the invoice number field.
   • If you need to change the payment method: Once you've clicked Enter Payment, under the column “Payment method”, click the current payment method shown, and it will toggle between check, direct deposit, and historical payment (to be used for reporting purposes).
   • Optional: Click Add Memo to leave a small message on the payment.
6. Click Continue to review the payment.
   • Reminder: Once a contractor has been paid, if you need to cancel/reverse the payment, we'll be able to correct the reporting, but you’ll need to recoup all funds (direct deposited or issued by check)–banking regulations prevent Gusto from recovering the funds on your behalf.
7. Verify the total amount and click Submit payments, or Go back if you need to make changes.
   • If your payments need to be made by check, you’ll be taken to a page that confirms the amount you need to pay the contractor. Once you’ve written the check, click Finish Payment.

Click here to edit or cancel the payment after you've run it.

Certain contractor payments can be canceled or adjusted in Gusto without having to contact us for help. If you only see the option to cancel a contractor payment, this means the payment has not fully processed, and you'll need to cancel and rerun the payment to make any changes.

If you’re looking to adjust an employee payroll instead, click here.

Cancel or adjust a contractor payment

1. Click the Pay section and select Pay history.
2. Click the Contractor payment history tab.
   • Under the payday, if a payment can still be canceled or adjusted, they'll be a tag letting you know. If the tag doesn't appear, contact us so we can assist with the next steps. 
3. Click View details under the "Actions" column.
4. Choose the option available–the cancel option is not available once the payment has processed.
   • Cancel the payment:
     • Scroll down to the contractor name, click X cancel payment, and then click Cancel Payment to confirm.
   • Adjust the payment:
     • Under the “Adjustments” section, click Make an adjustment. Then, tell us what you need to adjust. Based on your selection, we’ll let you know the next steps required to adjust the payment.

Contractor payment reversals–general info

• Reversing before the check date
  • We’ll return the funds to your bank account within a few business days. 
• Reversing on or after the check date
  • We’ll correct the reporting, but you’ll need to recoup all funds (direct deposited or issued by check)–banking regulations prevent Gusto from recovering the funds on your behalf.

Troubleshooting a wrong bank account

Bank error received

Have your contractor update their bank account information—you can also do this on their behalf in their contractor profile found in the People section. Once updated, they should receive their funds within 1-3 business days.

No bank error

If the transaction went through and you did not receive a bank error, the funds may have landed in the wrong bank account. Because Gusto is unable to retrieve the funds from the incorrect bank account, you’ll need to call the bank with the funds directly to address the issue.

If you've already paid a domestic contractor outside of Gusto, you can still add the payment to Gusto for reporting purposes—you'll want the contractor's 1099 for the year to reflect all payments.

Important reminders

• You'll be charged your standard monthly contractor fee (varies by plan type) for each month a historical payment is entered in. 
• Historical payments alone will not generate filings—we'll create 1099s once the company has:
  • A signed 8655 on file, and;
  • Submitted at least one payment to any contractor or employee through payroll.
    • These payments must be submitted before Gusto's end-of-year deadline for entering prior year information.

Adding historical payments

The deadline to enter historical contractor payments for the previous year is in early January—we'll send notifications to admins as the end of the calendar year approaches letting you know what the final deadline is to run all previous payrolls (this includes historical contractor payments). 

• If you're entering multiple historical payments at the end of the year, you can enter all payments in the same month—this way you'll only pay one month's fee per contractor for all of their historical payments.
  • You'll be charged for contractors in the month(s) where a payment is reported—the per contractor price will either be $6 per contractor or $12 per contractor, depending on your Gusto plan type.
• If you're adding a payment for a previous year and a Form 1099 has already been filed, you'll need to generate a corrected Form 1099-NEC.
• If Gusto did not handle your tax filings for the previous year, you'll need to generate and file a new Form 1099 outside of Gusto.

Add a historical contractor payment

1. Add the domestic contractor in Gusto (instructions above in this article).
   • If the contractor has been dismissed, you'll need to rehire them first. The payment(s) will be added for reporting purposes only.
2. Click the Pay section and select Pay contractors.
3. From the "Pay domestic contractors" tile, click Create Payment.
4. Click the pay date and select the actual date you paid your contractor–a message prompting you to further indicate this is a “historical payment” will appear. 
   • If you're adding a payment for a previous year and a Form 1099 has already been filed (or the deadline for changes has passed), you'll need to generate a corrected Form 1099-NEC. 
5. Next to the contractor's name, under the "Total amount" column, click Enter Payment. 
6. Under the "Payment method" column, the default payment method for that contractor will appear—click that payment method (typically Check or Direct Deposit) until it updates to Historical Payment.
7. Enter the number of worked hours, wages, or other additional earnings that were paid.
8. Click Memo to leave a small message and let your contractor(s) know what the specific payment is for.
9. Click Continue.
10. Review the summary and click Submit payments if everything looks right.

The payment(s) will be added for reporting purposes only.

View or adjust a historical contractor payment

1. Click the Pay section and select Pay history.
2. Click the Contractor payment history tab.

If you need to cancel or adjust a payment, click View details.

1. Click the People section and select Team members.
2. Search for the contractor's name, and click it to view their profile.
3. On the “Contractor Details” tab, scroll to the “Employment” header and click edit.
   • You'll be taken to a new onboarding experience, with the team member's relevant information automatically populated from their previous profile. 
4. Confirm the basic details, and make sure the “Worker type” is contractor—at this time, you cannot change to other worker types and will receive an error message if you try.
5. Select the country they'll work from.
6. Complete the onboarding process—you've already completed the first five steps.

Head to this article for more information on dismissing and rehiring contractors.

After you submit payroll or a payment, we’ll send direct deposits to your team electronically. Banks usually make the funds available in your team’s bank accounts by 5 pm. local time.

Team members can see their paystubs in their Gusto account on the check date, but not before. You can print paystubs early if necessary.

If you think there’s a delay with one or more direct deposits, follow these steps:

1. Check if the payment was submitted on time.
   • Sign in to Gusto.
   • Click the Pay section and select Pay history.
   • Select either the Pay history or Contractor Payment history tab.
   • If the payment was submitted after the deadline, the direct deposit will be delayed by one or more business days
     
     • You can see the new check date by going to Pay history and switching to the appropriate tab.
2. Check for any additional requests or issues.
   
   • Look at your Home page to-dos to see if we asked for more information.
     • If we did, respond to the request. After we review and approve the information, payments will be processed within a few business days.
   • If we could not debit funds from your company account, we’ll need to try again before processing the payment. You can find more details about a failed debit on your Home page and in your email.
   • Check your email or ask the primary admin about any recent changes.
3. Check if the team member is set up for direct deposit.
   
   • Make sure their payment method is set to direct deposit.
     • If it's set to check, you’ll need to give them a check for their pay
   • Verify the bank account information. If it’s wrong, your team member can update it.
     • If we can get the funds back from the original payment, we’ll resend it to the updated account. This may take a few business days.
     • If you delete the bank account instead of updating it, you’ll need to add a new one and then contact us to resend the payment.
4. Check if the bank account was recently changed (before or during payment processing).
   • Payments may have gone to the old account. The team member should check their old bank account to see if the funds were deposited there.
     • If they no longer have access to the old account, contact us to get the ACH trace ID. The team member will need to ask their bank to track down the payment.
   • Have the team member check their bank account or contact the bank directly to see if there are any pending payments.