Plenty of trade shops run on 1099 labor: a framing crew on a remodel, a sub who does all your duct runs, a second roofing crew you call in July. Paying them by check and sorting out 1099s in late January works until you have six subs and one of them never sent a W-9. Independent contractor payroll software collects tax info up front, pays by direct deposit and files the forms. This page covers paying 1099 crews specifically. For W-2 employees and the full comparison, see our guide to payroll for contractors.
What shops paying 1099 crews need from payroll software
Paying subs is simpler than running W-2 payroll: no withholding, no unemployment tax, no benefits. The work is all paperwork, and the paperwork is where trade shops get burned. A decent tool should do these things:
- Collect W-9 information before the first payment. Name, address, tax ID and entity type, sent as a digital request when you add the sub.
- Pay by direct deposit on your schedule, whether that's weekly for a regular framing crew or once for a one-off job.
- Track totals per sub across the year and flag who crosses the 1099-NEC threshold.
- File 1099-NECs with the IRS and deliver copies to each contractor by the January deadline.
- Tie payments to jobs so sub costs show up in job costing, either inside the tool or through the accounting sync.
W-9s and 1099-NEC basics
This is general information, not tax advice. Confirm your situation with a tax pro.
Get a signed Form W-9 from every sub before you pay them. It gives you the legal name, taxpayer ID and whether they're a corporation, which matters because payments to most corporations don't need a 1099-NEC. If a sub won't provide a taxpayer ID, the IRS generally requires backup withholding, currently 24%.
The reporting threshold changed recently. According to the IRS, for payments made after December 31, 2025, Form 1099-NEC is required when you pay a recipient $2,000 or more in the year, up from $600, and the threshold will be indexed for inflation in later years. Payments made in 2025 still use $600. The form generally goes to both the contractor and the IRS by January 31.
Classification matters more than any form. A sub with their own business, tools and other customers is likely a contractor. A helper who works your hours in your truck with your tools is likely an employee, whatever you call them. States can apply stricter tests than the IRS.
Common mistakes when paying 1099 crews
- Paying the crew lead and letting them pay the crew. If you pay one person for a five-person crew, you have one 1099 to file, but you also have no record of who was on your job site. Know who's working for you, and ask your insurance agent how uninsured sub labor affects your workers' comp audit.
- Not collecting certificates of insurance. A sub without their own general liability and workers' comp can leave you paying for their claims, and your carrier may charge premium on their payroll at audit. Get a current certificate before the first job and track the expiration date.
- Paying through a personal card or app. Payments to subs through personal payment apps are easy to lose track of in January. Run every sub payment through your business account or payroll tool.
- Waiting until January to sort it out. By then the sub has moved, changed phone numbers, or doesn't answer. Collect everything up front.
How the picks compare
Gusto is the best fit for most shops because it bills contractors only in months you pay them and runs W-2 payroll in the same account. OnPay costs the same at the base tier and is a good choice if you value no setup fees over a big integration list. QuickBooks is the natural choice when sub costs need to land on projects for job costing; paying subs as vendors through bills and filing 1099s at year-end may be enough on its own. ADP RUN is for larger mixed workforces that want HR support too.
What to look for before you sign
- Digital W-9 collection when you add a contractor
- Direct deposit with a clear cutoff time, so Friday pay actually lands Friday
- Year-end 1099-NEC filing included in the price, not a per-form add-on
- A sync that sends each sub payment to the right vendor and job in your accounting system
- Billing only for months you pay a contractor, if your subs are seasonal
- A contractor portal where subs can download their own 1099s
What it costs
Prices as of October 2026, for a shop paying only 1099 subs in a given month.
| Subs paid that month |
Gusto Simple ($49 + $6 each) |
OnPay ($49 + $6 each) |
| 1 |
$55/mo |
$55/mo |
| 5 |
$79/mo |
$79/mo |
| 15 |
$139/mo |
$139/mo |
QuickBooks Workforce Payroll starts at $50/mo base plus $7 per employee, and ADP RUN is quote only. If you already have W-2 staff on one of these services, adding subs usually costs only the per-person fee.
