Hire and pay US-based domestic contractors

Add your independent US-based contractors' basic information, invite them to self-onboard, send new hire documents (like contracts) for them to sign, and get ready to pay your team with ease. If you're not already using AutomotoHR for payroll, get started now. 


  • AutomotoHR cannot advise whether a worker should be classified as a W-2 employee or a 1099 contractor. We recommend working with an HR specialist or referring to the IRS government website.

Once your domestic contractors have been added to AutomotoHR, pay them by check or direct deposit to a bank account using the steps under the Pay a domestic contractor dropdown (there is no difference in cost between the two).

  • Contractors cannot be paid to a prepaid debit card.
  • Contractors are paid with the same payment speed as your employee payroll. 


AutomotoHR supports domestic contractors with the following criteria

  • Valid SSN or ITIN (for an individual), or FEIN (for a business)
  • Work address in the US if AutomotoHR is generating a 1099-NEC at year end
  • Bank account in the US if being paid through direct deposit
  • No tax withholding or back-up withholding, if required for the contractor


Add a domestic contractor to AutomotoHR—instructions, cost(s), and W-9 info

You'll only be charged for contractors in the month(s) you pay them–the per contractor price will either be $6 per contractor or $12 per contractor, depending on your AutomotoHR plan type.


Add a US-based independent contractor

  1. Go to 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—AutomotoHR will use this name to refer to this person 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—use an existing address that’s not associated with your company. This team member will use this email to sign in to AutomotoHR and receive certain personal info.
  6. We'll default to inviting the individual to enter their own details in AutomotoHR 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, 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 will allow the contractor to be visible in the Deartment and Teams. 
  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 AutomotoHR. 
  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.
  16. Select any Group documents you'd like to share with them.
  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.

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 AutomotoHR.

Form W-9 (Taxpayer Identification) info

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

Once AutomotoHR's version of the W-9 has been signed by the contractor, it cannot be edited in AutomotoHR. You can have the contractor fill out a new Form W-9 outside of AutomotoHR, and then upload the new version to their AutomotoHR profile or Reassign the W9 within the Contractors profile and have them make the changes needed.

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

  1. Go to the Employee Team Members section and select the Team member.
  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

AutomotoHR will provide electronic copies of 1099-NEC to your domestic 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 AutomotoHR, but don't want AutomotoHR to produce a 1099-NEC for one or more contractors at the end of the year, contact our team from the Help or Priority support section of your account to let us know. 


  • 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 


Pay a domestic contractor

If you're using AutomotoHR Time Tracking for contractors, learn how to sync their hours. 


Pay your domestic contractor

  1. Click the Payroll 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.
  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 AutomotoHR 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.


Record or adjust a historical contractor payment processed outside of AutomotoHR (and generate 1099s for contractors paid prior to AutomotoHR)

If you've already paid a domestic contractor outside of AutomotoHR, you can still add the payment to AutomotoHR for reporting purposes—this helps make sure the total amount on the contractor's Form 1099 is accurate.

  • To process a new payment, check out the information in the Pay a domestic contractor dropdown. 
  • To adjust or cancel a previously processed-in-AutomotoHR contractor payment, click the Cancel or adjust a contractor payment processed by AutomotoHR dropdown. 

For each month a historical payment is entered in, you'll be charged your standard monthly contractor fee. 

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 AutomotoHR'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 AutomotoHR 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 AutomotoHR did not handle your tax filings for the previous year, you'll need to generate and file a new Form 1099 outside of AutomotoHR.

Add a historical contractor payment

  1. Add the domestic contractor in AutomotoHR (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 Payroll 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 Payroll section and select Payroll history.
  2. Click the Contractor payment history tab.


Cancel or adjust a contractor payment processed by AutomotoHR

Certain contractor payments can be canceled or adjusted in AutomotoHR 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 will need to cancel and rerun the payment to make any changes.


Cancel or adjust a contractor payment

  1. Click the Payroll section and select Payroll 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 Employee Team Members 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 AutomotoHR 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.

Contractor payments per month—default limit and how to increase it

For all of our product plans, except our contractor-only plan, AutomotoHR 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 or Priority support section of your account and ask our team to increase the contractor payment limit for you. 


Dismiss or rehire contractors


Troubleshoot payment problems

After submitting a payroll (or payment), we’ll electronically send your team direct deposits. After the banks receive our electronic payments, they have until 5pm local to make funds available to your team in their bank account.

Paystubs become available in team members' AutomotoHR account on the check date, but not before—you can print paystubs early if needed.

If you believe there's a delay with one or more of your team's direct deposits, follow the steps below to troubleshoot.

  1. Check to see if the payment was submitted on time—head to the Payroll section, select Payroll history, and toggle to either the Payroll 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.
      • If delayed, you can view the new expected check date by heading to the Payroll section, clicking Payroll History, and toggling to either the Payroll  history or Contractor Payment history tab.
    • If the payment was not submitted as expected, check your dashboard to see if any additional information was requested.
      • If yes, respond to the request and once the information has been reviewed and approved, the payments will be processed and funds paid within a few business days.
    • If we were unable to successfully debit funds from your company account for the payment, we’ll need to resubmit the debit before the payment can be processed.
      • You can find information about handling failed debits on your Home page, and in your email.
  2. Check your email (or contact the Primary admin) to see if you received any date change notifications.
  3. Check to see if the team member is set up to receive direct deposit—their payment method should be set to direct deposit.
    • If the payment method is set to check, you’ll need to issue them a check for their net pay.
  4. Verify the bank account information—if the routing or account number is incorrect, you can update it on your teammates' behalf, or have them update it on their own. 
    • If we're able to retrieve the funds from the original payment, we'll automatically resend it to the updated bank account; this can take a few business days to complete.
      • If you decide to delete the bank account (rather than update the existing one), you’ll need to add a new bank account and then contact us so we can resend the payment.
    • If the bank account was recently changed, payments may have been routed to the previous account. 
      • The team member should review their previous bank’s transaction history to see if funds were deposited there. 
        • If they no longer have access to the old account, contact us to get the ACH trace ID for the payment, then the team member will need to contact their bank to have them track down the payment.
  5. Have your team member sign in to their bank account or contact the bank directly to check if there are any pending payments (credits) incoming.

If you’re still unable to determine the payment status and believe there’s an issue, please contact us.

This article is not to be taken as tax, legal, benefits, financial, or HR advice. Since rules and regulations change over time and can vary by location, consult a lawyer or HR expert for specific guidance.