Paying Contractors
How to categorize contractor payments and which forms to collect from US and international contractors.
Contractors and freelancers are usually one of the biggest costs of a small digital business. Recording them correctly from the start makes year-end much easier.
Categorize the payment
- Open the payment in Transactions.
- Set the Contact to the contractor's name (not the payment platform, such as Wise or Deel). This lets you see how much you paid each person.
- Choose the Category:
- US Based Contractors for people or companies in the US.
- International Contractors for people or companies outside the US.
- Click Confirm.
Collect the right form before the first payment
- US contractors: ask for a Form W-9. It has their legal name and taxpayer identification number.
- International contractors working outside the US: ask individuals for a Form W-8BEN (companies use Form W-8BEN-E). It confirms they are not US taxpayers.
Save the forms in a secure folder together with the contractor's invoices (see What to Do With Your Receipts).
At year end: Form 1099-NEC
Companies usually must send a Form 1099-NEC to each US contractor paid above the IRS threshold during the year, and file it with the IRS by January 31. The threshold was $600 through 2025 and is $2,000 for payments made from 2026. Contractors outside the US who sent a W-8BEN generally do not receive a 1099.
Use the Contact filter in Transactions to see the total paid to each contractor during the year and share it with your accountant.
This article is general information, not tax advice. Your accountant confirms which forms your company must file.