Square Payroll Contractor FAQs
Visit Add Independent Contractors to Square Payroll for detailed instructions on how to add contractors.
For detailed instructions on how to pay contractors, visit Pay Contractors Through Square Payroll.
The fee for contractors is $6 per contractor paid in a given month. You can pay each contractor as many times as you’d like each month at no extra charge. If you do not pay any contractors within a given month, you will not be charged. You will not be charged the $35 monthly subscription fee if you have not paid a W-2 employee.
At the end of the calendar year we will generate copies of Form 1099-NEC for each of your contractors and file this form with the IRS on your behalf. The contractor gross pay for the year will be reported in Box 1 of Form 1099-NEC (non-employee compensation).
Contractors can access a digital copy of their Form 1099-NEC through their online Team Member Dashboard or through the Team App on a mobile device. Remember, you are still required to provide your contractors with a physical copy of their Form 1099-NEC unless they consent to electronic-only delivery.
Alternatively, you can opt in to Paper Mail and Square will mail paper copies of Form 1099-NEC to your contractors. By opting in, Square will deliver paper copies of forms W-2 and 1099-NEC by mail. If you opt in to Paper Mail, there is a fee of $3 per employee or contractor.
Note: Square Payroll does not file Form 1099-NEC or equivalent forms at the state level. No new hire reports will be filed for contractors. Contact your state agency to understand additional reporting requirements for contractors, if any.
You can do this by recording a manual check contractor payment for prior paid wages. For detailed instructions, visit transferring historical contractor payment information. Please ensure that the prior payment history for your contractors is captured within Square Payroll before the end of the year for accurate tax filings.
Learn more about transferring prior W-2 payroll history from a previous payroll provider.
Currently, Square Payroll for contractors does not:
- Generate and file state versions of Form 1099-NEC.
- Pay out reimbursements: All contractor payments are recorded in Box 1 of Form 1099-NEC (non-employee compensation).
- Support contractors with withholdings. Learn more here.
- Support paying businesses. You must onboard contractors with an SSN. We do not allow you to onboard contractors with an EIN.
- Workers Compensation Insurance: Contractor payments will not be sent to our Workers Compensation Insurance partner, AP Intego.
- New Hire Reporting: Some states may require new hire reports for contractors. We do not file new hire reports for contractors.
Learn more about the difference between W-2 employees and 1099 contractors or visit irs.gov for more guidance.