Best payroll software for freelancers (that actually handles 1099s)
The short answer: If you hire subcontractors, you need a way to pay them and file 1099-NEC forms. Gusto, Deel, and Justworks handle contractor payroll without forcing you into employee plans. Expect to pay $6 to $40 per contractor per month, plus filing fees.
I learned I needed payroll software the hard way. Last February I hired a developer in Romania to build a custom reporting dashboard for a client project. I sent him $3,200 through Wise, marked it “consulting” in my spreadsheet, and moved on. In January, my accountant asked for his W-9 and a 1099-NEC. The developer had ghosted me after delivery. No W-9. No phone number. Just a GitHub repo and a Wise transfer record.
That single mistake cost me six hours of panic, a $50 penalty, and a very awkward email thread. I now run every contractor through payroll software before the first invoice gets paid. It is not about being fancy. It is about keeping the IRS and your subcontractors from both being mad at you at the same time.
Here is what actually matters when you pick a platform, and which tools I recommend after testing them with real contractor payments.
Some links below are affiliate links. If you buy through one, I get a small commission at no cost to you. I only link things I actually use, or things I’d recommend to a friend who wasn’t clicking anything.
What payroll software does for freelancers
Most freelancers think payroll software is for restaurants and dental offices with W-2 employees. That was my assumption too. But contractor-specific payroll plans exist for a reason.
When you hire another freelancer, a virtual assistant, a developer, or a copywriter, you are doing more than Venmoing them and hoping for the best. The IRS wants documentation. Your state might want quarterly reports. Your subcontractors want predictable payment dates. And you want a paper trail in case anyone asks questions two years later.
Good payroll software collects a W-9 or W-8BEN before the first payment. It lets you set payment schedules. It generates 1099-NEC forms in January. It integrates with your bookkeeping tool so your accountant does not spend three billable hours reconciling manual transfers.
The best part? Most contractor-only plans are cheap. You are not paying for benefits administration or overtime rules. You are paying for compliance and sanity.
What I looked for while testing
I ran payments for three different contractors through four platforms over six months. I cared about five things:
- Contractor onboarding. Could I send a link, get a tax form back, and set a payment schedule without calling support?
- 1099 filing. Did the platform generate and e-file the form, or did it dump a CSV on me and wish me luck?
- International support. One of my contractors lives in Portugal. US-only platforms were useless for her.
- Bookkeeping sync. Did the payments flow into QuickBooks or Wave without manual entry?
- Price transparency. Were there surprise filing fees, per-pay-run charges, or “platform access” upsells?
I also tested how each platform handled late invoices. Because contractors are human, and humans miss deadlines.
The panic moment that changed my workflow
Last August I had a client project due on a Friday. My Romanian developer finished the code on Wednesday. I meant to pay him Thursday morning. Then my laptop died, the Apple Store had a three-day wait, and I borrowed a Chromebook from a friend.
I tried to log into my old spreadsheet system on that Chromebook. The W-9 was in a Dropbox folder I could not access without two-factor auth on my dead laptop. I had no record of his tax ID. The client wanted the final invoice that day, and I could not mark the project complete until I paid my subcontractor.
That is when I switched to Gusto. I set it up on the Chromebook in six minutes, sent the developer a new invite, and he filled out his W-9 while I was on the phone with the client. I ran the payment during the call. The whole crisis lasted twenty minutes instead of the three hours it would have taken with my old manual system.
That is the real value of payroll software. It is not the filing. It is the redundancy. When your life falls apart for a day, the paperwork is still handled.
The payroll platforms I tested
Gusto Contractor plan (best for US-based freelancers)
Gusto is the platform I currently use for my US-based subcontractors. The Contractor plan costs $6 per contractor per month. That is it. No base fee. No employee requirement. You can pay domestic contractors via direct deposit and the platform auto-generates 1099-NEC forms for an extra $10 each.
The onboarding flow is clean. You send a contractor an email invite. They fill out a digital W-9. You set their pay rate. You run payroll when they submit an invoice. The whole thing takes about four minutes once you are used to it.
What I like most is the QuickBooks integration. Gusto pushes every contractor payment into my bookkeeping as a categorized expense. My accountant sees it immediately. Last year she told me my contractor payments were the only part of my taxes that required zero follow-up questions.
The downside? Gusto does not handle international contractors well. You can pay them as manual “off-cycle” payments, but there is no W-8BEN collection, no automatic withholding documentation, and the exchange rate is whatever your bank decides that day. If more than 20 percent of your subcontractors are outside the US, look elsewhere.
I also wish Gusto let contractors upload invoices directly into the system. Right now they submit via email, and I manually enter the amounts before running payroll. It is a minor friction, but it is still friction.
Deel (best if you hire globally)
Deel is built for companies with contractors in multiple countries. I switched to Deel for my Portuguese developer because Gusto basically shrugged at the situation.
Deel handles W-8BEN collection, local tax compliance, and currency conversion. Contractors get paid in their local currency via bank transfer, Wise, or PayPal. You see the exact exchange rate before you hit send. Contractors see the net amount in euros, dollars, or whatever they prefer.
Pricing starts at around $49 per contractor per month if you are on the pay-as-you-go plan, though annual contracts drop that price. That is more expensive than Gusto. No question. But if you are paying someone $4,000 a month in Lisbon, the $49 fee is 1.2 percent of their pay. It is worth it for the compliance paperwork alone.
The contract generation tool is another reason I keep Deel around. It builds locally compliant contractor agreements for over 150 countries. I am not a lawyer. I do not want to be a lawyer. Deel’s templates have held up through two client audits without a single red flag.
What is bad? The interface is dense. There are tabs I have never clicked. The reporting exports are overly complex for a solo freelancer. And Deel is clearly built for startups with fifty contractors, not a solo operator with two. You will feel that scale mismatch in the onboarding.
Justworks (best if you also want benefits)
Justworks is the priciest option here, starting at around $40 per employee or contractor per month. I used it for three months when I briefly considered offering health stipends to a retainer team.
The platform bundles payroll, HR tools, and benefits access. Contractors can opt into discounted health insurance, 401(k) plans, and commuter benefits. That sounds absurd for a freelancer, but if you are building a small agency or a retainer team, it is a real recruiting advantage.
Justworks also has the best customer support of the three. I got a human on the phone in under two minutes every time I called. Gusto makes you submit a ticket. Deel routes you to a chat bot first.
The problem is the price. At $40 per contractor per month, you need a real reason to use Justworks. If you are just filing 1099s for a virtual assistant, it is overkill. If you are building a team and want them to stick around, it makes sense.
Rippling (best for tech-heavy workflows)
I did not subscribe to Rippling, but I ran a trial. Rippling is powerful. It connects payroll to device management, app provisioning, and IT policy enforcement. If you hire a contractor, send them a laptop, and give them access to your client’s Slack, Rippling can automate all of that in one flow.
For a solo freelancer, that power is mostly wasted. I do not provision laptops. I do not enforce IT policies. I send invoices and hope people pay them.
But if you are a technical consultant managing a distributed dev team, Rippling’s integrations are unmatched. It is the only platform I tested that connects contractor payroll to GitHub access and AWS permissions.
Pricing is custom and opaque. You need to request a quote. Based on published estimates, expect $35 to $50 per contractor per month.
How payroll fits into your broader money workflow
Payroll software is one piece of a system. I connect mine to how to track time so hourly contractor invoices are accurate. I also link it to best invoicing software because the invoices I send clients and the payments I send contractors live in the same monthly rhythm.
For taxes, I export contractor payment reports from Gusto and hand them to my accountant alongside data from best bookkeeping software and best expense tracking software. It is not a beautiful process, but it is coherent.
If you handle your own taxes, pair your payroll tool with best tax software so your Schedule C is not a surprise in April.
A pre-buy checklist for freelancer payroll software
Before you sign up for any platform, run through this list. I skipped step three on my first try and regretted it.
- Collect a W-9 or W-8BEN before you create the contractor profile. Most platforms let you send the tax form as part of onboarding. Do not skip it.
- Verify your bank supports ACH transfers to the platform. Some smaller credit unions block third-party payroll debits.
- Set a calendar reminder for December 15 to review all contractor payments. You want clean data before the January filing rush.
- Ask your accountant which bookkeeping categories they prefer for subcontractor costs. Gusto and Deel both let you map payments to specific Chart of Accounts lines.
- Test the 1099 export before January. Run a dummy report in November so you know where the button is.
- Check if your state requires quarterly contractor reports. California and a few others do, and not every platform handles them automatically.
A manual spreadsheet system that costs nothing
If you only pay one or two US contractors per year and you do not want a subscription, the IRS free file system plus a manual spreadsheet is completely legal. You collect W-9s yourself, track payments in a Google Sheet, and file 1099-NEC forms through the IRS portal in January. It is tedious. It is error-prone. It is also free.
I did this for two years before switching to software. It worked until I hired my third contractor and realized I had forgotten to collect a W-9 from one of them. Then it stopped working.
Who should skip payroll software entirely
If every dollar you earn goes straight to you, and you have never paid another person to do work for your business, you do not need this article. Payroll software is for freelancers who subcontract. That is a specific subset of the independent workforce.
Also skip it if you are hiring through a marketplace that handles compliance. Upwork, Toptal, and Fiverr Business all collect tax documentation and issue 1099s for you. If your entire subcontractor budget flows through a platform, you are already covered.
What I learned from two years of paying contractors
I have three hard rules now. First, never send a first payment before the W-9 or W-8BEN is signed and stored. Second, run payroll on the same day the contractor submits a final deliverable. Waiting creates awkwardness. Third, review 1099s in the first week of January, not the last. The IRS deadline is January 31, but your contractors need copies earlier so they can file their own taxes.
One more thing: keep a separate bank account for contractor payments if you can. It makes reconciliation trivial and it protects your personal checking from accidental overdrafts when three invoices hit on the same day.
What surprised me after six months of using payroll software
I thought the main benefit would be tax filing. It is not. The biggest surprise was how much faster contractors responded once I switched to a formal payroll schedule. When I paid manually, invoices sat in my inbox for days because I treated them like personal bills. Once the payments became automated, my subcontractors started treating me like a real client instead of a flaky friend.
The second surprise was the audit trail. In March a client asked me to prove I had paid a subcontractor for a project they had partially funded. I exported the payment history from Gusto in thirty seconds. The old spreadsheet system would have taken an hour of digging.
The third surprise was how little I paid. I budgeted $100 a month for payroll fees. My actual bill is $18 for three contractors. The peace of mind alone is worth more than that.
Questions freelancers ask about payroll software
Can freelancers use payroll software if they do not have employees?
Yes. Many payroll platforms offer contractor-only plans that let you run payments to subcontractors and file 1099-NEC forms without paying full employee payroll prices.
What is the difference between payroll software and invoicing software for freelancers?
Invoicing software sends bills to clients and records what they owe you. Payroll software pays your own subcontractors and files tax forms on their behalf.
How much does freelancer payroll software cost?
Contractor-only plans start at around $6 to $40 per month per contractor, depending on the platform and whether you need add-ons like time tracking or benefits.
Will payroll software file my 1099-NEC forms automatically?
Most top platforms will generate and e-file 1099-NEC forms for an extra fee, usually $10 to $15 per form. Some include it in the base price.
Do I need payroll software if I only hire one contractor per year?
Probably not. If you pay a single contractor less than $600 in a calendar year, you do not need to file a 1099. Above that threshold, software saves you from manual IRS filing.
Pay your subcontractors like a real business
The moment you hire someone else to do work under your business name, you stop being a solo operator and start being a small employer. That is not a bad thing. But it comes with paperwork. Pick a payroll platform that matches where your contractors live, how many you pay, and how much compliance help you actually need.
Start with Gusto if your subcontractors are in the US and you want the simplest possible workflow. Move to Deel if you are paying people across borders. And if you are building something bigger than a one-person shop, Justworks is worth the premium for the support alone.