How to add and pay contractors

SystemSystem Posts: 359 admin

imageHow to add and pay contractors

You can pay independent contractors using Payroll by Wave. Because of their special tax status, contractors are considered vendors in Wave. This keeps your accounting accurate and your business com...

Read the full story here


edited January 26, 2019 in Help Center Discussion

Comments

  • tmsprojectconsultingtmsprojectconsulting Member Posts: 4

    This process worked for my first bill & Wave Payroll Direct Deposit, but NOT for my second. The Bill shows as Success (a status I do not see explained anywhere) - and it is still showing as unpaid. This means my 1099 year end forms and year-end transactions are all OFF. The Vendor did receive the payment but the WAVE transactions are not responding as expected -- and I do not have the option of manually paying the bill. Asked Chat for support, but no answer yet - still looking at articles for help. Anyone ever have this "success" (but not really "success") issue?

  • KatesHereKatesHere Member Posts: 5

    I can’t find any of these!
    No option for “Type/1099 contractor”, nor “subcontracted services” under Expenses.

  • SophiaSophia Administrator Posts: 147 admin

    hi @KatesHere, you'll be able to mark a vendor as a 1099 contractor under Purchases > Vendors. You'll need to create the vendor and mark them as a 1099 contractor first before you can create bills for them under Expenses.

    @tmsprojectconsulting, thanks for pointing out that the article does not define "success" - I'll make sure it gets added. In this case, it means that the bill payment has been successfully added to your next payroll run, but that it hasn't been paid out yet. Were you able to successfully speak to a support specialist? Please let us know and I can get a payroll specialist to assist. Thank you!

  • KatesHereKatesHere Member Posts: 5

    Still can’t find to way to “mark” as 1099 contractor.

  • Ryan_WRyan_W Administrator Posts: 462 admin

    Hey @KatesHere, it looks like there are still other actions you need to take in setting up Payroll with us before adding contractors. I recommend clicking Payroll > Run Payroll > Payroll Set Up (in the top right corner), and follow the prompts there. If you're still stuck, please submit a support request here if you haven't already!

  • DevinDevin Member Posts: 10

    How much does it cost?
    Paying contractors through Payroll by Wave costs $4 per contractor paid per month, in addition to your payroll base fee. You will not be charged the $4 fee on months you do not pay the contractor.

    Is this accurate for both Canada and US? And is this fee in CAD currency? Thanks.

  • KatesHereKatesHere Member Posts: 5
    Hi @Ryan_W , it seem that I have to pay $39/ to do payroll... what if I don’t intend to use the payroll to pay my subcontractors? Can’t I just enter them as a vendor? That’s what I thought I was supposed to do if I didn’t need the payroll services. I’m confused now..
  • ZoeCZoeC Administrator Posts: 388 admin

    Hey @Devin, yes that is correct for both Canada and the US, Fees in US are base fee + USD$4/employee/contractor, fees in Canada are base fee + CAD$4/employee/contractor.

    Hey @KatesHere in order to pay contractors through Wave to generate 1099miscs you have to have an active payroll account. If you do not need to pay your contractors via direct deposit and have Wave generate 1099miscs for them, then you can still add them as vendors and create bills for their services without an active Payroll account. I hope that clears things up! :smile:

  • joe_gabrielejoe_gabriele Member Posts: 5

    We are currently operating a marketplace that connects buyers and vendors (independent contractors). Due to the nature of our business, the traditional marketplace payments dont work for us (ie. Stripe Connect). My biggest question is, when we invoice the buyer for the vendor's services, is there anyway to connect/associate and invoice to that specific vendor so we can easily identify which vendor needs to get paid once we receive payment from the buyer?

    Ex:
    Buyer buys $100 service from Vendor
    We create and send invoice to Buyer on behalf of Vendor
    Buyer pays us $100, we take our fee and pay the Vendor the balance.
    Is there a way to do this more seamlessly?

    Also, is there a on-boarding portal for vendors to create and manage their own account, including banking information for direct deposit? Or must they contact us to have any updates made? It would also be nice for each vendor to see history / total paid to date.

    Thanks,
    Joe

    edited April 12, 2019
  • joe_gabrielejoe_gabriele Member Posts: 5

    Edited: See below

    edited April 12, 2019
  • JamieDJamieD Administrator Posts: 1,145 admin

    Hey @joe_gabriele. What you're trying to accomplish in Wave might be possible, but it wouldn't be as clear as day as you would like it to be. In a sense, when you are invoicing clients you would need to add them as Customers (not vendors) and when you are paying a bill, you would have to add them as vendors (these can't be interchangeable).

    You could simply add them as both, however, which might be easier for you to track when you are actually making the payment to the vendor (if you are wanting to pay them directly via Wave, you will need to setup a payroll subscription).

    As for the second part of your inquiry, there currently isn't a way for a vendor/contractor to create their own account in Wave to edit their information. This could be something that we implement in a future roadmap, but we don't have any immediate plans in doing so just yet.

  • jer8888jer8888 Member Posts: 1

    Hi,
    I have many contractors I pay with Venmo, how do I categorize them in wave? In Quickbooks there was a "contract labor" designation, but I don't see that. Please help.

  • JamieDJamieD Administrator Posts: 1,145 admin

    Hey @jer8888. If you are paying your contractors outside of Wave, you will need to make sure they are added as a vendor first. Once you've created a bill and added the vendor to that bill, you should also be able to select a category for the expense called 'subcontractor services' (if this isn't in the chart of accounts section, you can simply add it). From there, you can mark the bill as paid and the bill itself will be associated with the expense category, as well as the vendor that you added to the bill.

  • theflynnstertheflynnster Member Posts: 1

    Does one create the "subcontractor services" expense category under Operating Expenses or Payroll Expenses?

  • JamieDJamieD Administrator Posts: 1,145 admin

    Hey @theflynnster. It's really up to you in this particular situation... My suggestion would just be operating expenses, but also, this account should have already been automatically created for you. You will be able to track your data the same way if you create the account in either section of the Chart of Accounts.

  • TPorrecaSLPTPorrecaSLP Member Posts: 1

    I believe that when you add anyone and want to pay them with direct deposit that legally you have to have them sign a form and fill out the information. Isn't that correct? Where would the forms be so I can pay them through their bank?

  • JamieDJamieD Administrator Posts: 1,145 admin

    @TPorrecaSLP When you are paying the 1099/T4A contractor (and adding them in Wave), you can simply add that information under the bank details.

    There isn't a form that's required to fill out and sign for paying your contractors. If you have direct deposit enabled in your account, this is something that you should be able to do with the application you filled out during your Payroll onboarding process.

  • 007007 Member Posts: 2

    Can I set this up to pay overseas contractors that I use as VAs (not canada)...at the moment we pay them via western union.

    Thanks

  • AlexLAlexL Administrator Posts: 1,794 admin

    Hey @007 . You cannot direct deposit contractors that are outside of your country of residence through Wave Payroll.

  • scho012scho012 Member Posts: 1

    Hello,
    I have a situation...an Indep Contractor does graphic design work for me, so I create her as a vendor, then create a bill. Then when the work is done, I pay through Paypal (which gets deducted from my main operating expense acct) and she sends me a receipt and upload the receipt....So now I go and input that I paid the bill and verify the receipt. When I go to my transactions I have THREE transactions: first from bank, second from paid bill, third from the uploaded receipt. Wave allows me to merge only TWO transactions.....AM I DOING SOMETHING WRONG? How do I effectively merge all three? Please advise....
    Oh and I also have a receipt from PayPal...if I upload that I now have FOUR transactions that need to be merged.... what should I do? thanks

    edited December 10, 2019
  • mpietrzakmpietrzak Member Posts: 1

    Same question as from someone below. @AlexL Does one create the "subcontractor services" expense category under Operating Expenses or Payroll Expenses? You can't create a bill without the subcontractor services. Also, I'm a bit fuzzy on the idea of bills vs receipts....My subcontractors send me an invoice that I forwarded to [email protected] is that how I should handle it, or should i setup bills for every time I pay them? If so, is it possible to setup recurring bills?

  • TayTay Member Posts: 1

    I am new to this and would like to know if I just want to use the on-boarding portion of payroll is that an option and is there a fee associated? My bank will allow me to pay my contractors directly with no fee, but I would like a secure way for them to submit their direct deposit information and obtain 1099 at the end of the year?

  • EmmaPEmmaP Administrator Posts: 639 admin

    Hey @Tay! If you only have contractors you can use the Purchases > Bills section in your Wave account to create bills for contractors. If you want to provide a 1099 at year-end from Wave this will incur a fee. You can read more about everything you need to know about 1099 forms here. Wave Payroll is a subscription based service so depending on how much of the on-boarding process you were utilizing it may incur a fee after the first trial month is over.

  • OPTOPT Member Posts: 2

    Newbie here. How do I record a gratuity paid to a vendor/subcontractor? Sometimes I pay in cash and sometimes I transfer electronically using a cash transfer app that's linked to my biz debit card. What do I do to reconcile this transaction. Thanks.

  • BarsinABarsinA Administrator Posts: 1,535 admin

    Hey @OPT

    (This if for paying users on an active payroll account) If the transaction does not appear in your initial journal then it would likely just be categorized as an expense.
    Or you can create something similar in your chart of accounts.

  • OPTOPT Member Posts: 2

    Thanks so much @BarsinA

  • StefStef Member Posts: 2

    Hi,
    Is it possible to receive invoices automatically from contractors (like Freshbooks does)?
    Thanks!
    S

  • ConnorMConnorM Member, Administrator Posts: 1,175 admin

    Hey @Stef! Can you explain a little more about what your ideal workflow would be here? Currently, in the Wave software, we don't have a way for contractors to invoice you and for it to immediately appear as a bill in Wave, but if there's some other steps you're thinking of, I'd love to know more!

  • StefStef Member Posts: 2

    Hi,
    This is the function that keeps me with Freshbooks for the moment.. it' really handy. My contractors sign up for their own account and they invoice me as the client. I receive an email with a link to their invoice and once I click, I get the option to add it as a bill in my own account. I only need to do this step the first time for each contractor and from then on, their bills appears on my account. It has really simplified my AP workflow.
    I'll be looking out for this feature to come in Wave; thanks!
    Stef

    edited March 20, 2020
  • NCCNCC Member Posts: 3

    @scho012 said:
    Hello,
    I have a situation...an Indep Contractor does graphic design work for me, so I create her as a vendor, then create a bill. Then when the work is done, I pay through Paypal (which gets deducted from my main operating expense acct) and she sends me a receipt and upload the receipt....So now I go and input that I paid the bill and verify the receipt. When I go to my transactions I have THREE transactions: first from bank, second from paid bill, third from the uploaded receipt. Wave allows me to merge only TWO transactions.....AM I DOING SOMETHING WRONG? How do I effectively merge all three? Please advise....
    Oh and I also have a receipt from PayPal...if I upload that I now have FOUR transactions that need to be merged.... what should I do? thanks

    I would like to know the answer to this as well please!

Sign In or Register to comment.