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The Best Payroll Services for Contractors

Updated Dec 04, 2023
Best for Small Businesses
  • Unlimited pay runs
  • Payroll tax preparation
  • Customizable reports
  • Unlimited pay runs
  • Payroll tax preparation
  • Customizable reports
Best for Growing Businesses
  • Employee self-service portal
  • Built-in HR functions
  • Scalable features and functionality
  • Employee self-service portal
  • Built-in HR functions
  • Scalable features and functionality
Best for Contractor Self-Service
  • User-friendly app and website
  • Advanced analytics tools
  • Customizable reports
  • User-friendly app and website
  • Advanced analytics tools
  • Customizable reports
Best for Businesses of All Sizes
  • Customizable service plans
  • 200+ in-house compliance experts
  • User-friendly payroll platform
  • Customizable service plans
  • 200+ in-house compliance experts
  • User-friendly payroll platform
Best for Ease of Use
  • 500+ software integrations
  • Built-in payroll workflow templates
  • Easy-to-use interface
  • 500+ software integrations
  • Built-in payroll workflow templates
  • Easy-to-use interface

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If your business works with independent contractors, you know that managing payroll comes with unique challenges. Whether you work with freelancers, consultants or third-party vendors, a reliable payroll service can simplify your financial responsibilities while ensuring accurate, timely and legally compliant payments.

The best payroll services for businesses that pay independent contractors can handle tax classifications and payroll forms while providing multiple payment methods, support for employee self-service and much more. We evaluated and tested multiple platforms to help you find a payroll service that can make paying contractors seamless. Our five top options scored well in areas like unlimited payroll processing, payroll tax support, mobile platform access and international payments. Here’s a look at the top five payroll services for businesses that pay independent contractors.

Compare Our Best Picks

BND Ribbon
Our Top Picks for 2024
OnPay Payroll Software
ADP Payroll
Paychex Payroll
Rippling Payroll
Rating9.5/109.2/109.0/109.3/109.4/10
Best use case

Small businesses

Growing businesses

Contractor self-service

Businesses of all sizes

Ease of use

Free trial

Yes

Yes

Yes

No

No

Starting price

$40/month + $6/month per employee

Custom pricing

Custom pricing

$39/month + $5/month per employee

$8/month per user

Integrations

11

500+

250+

250+

500+

Mobile app

No

Yes

Yes

Yes

Yes

Customer support

Phone, email, chat and online help center

Phone, online help form and local service centers

Phone, chat, email, and online training hub

Phone, chat and online form

Chat, online form and online help center

Review Link
Scroll Table

OnPay Payroll Software: Best for Small Businesses

  • OnPay’s affordable, all-inclusive pricing package is ideal for small businesses.
  • OnPay allows unlimited pay runs, which is helpful for paying freelancers throughout the month.
  • OnPay doesn’t provide users with a mobile app.
Editor's Rating: 9.5/10
Visit Site

OnPay is a straightforward payroll solution designed for small businesses and startups. With OnPay, you can pay employees and contractors through direct deposit or paper checks. We like that this vendor offers unlimited payroll runs – a helpful feature for businesses that run payroll weekly or have ongoing contractor payments.

OnPay has standout features for small businesses that pay independent contractors, including HR compliance checklists, automated workflows and customizable document templates. These built-in functions streamline the process of managing contract workers. However, we were disappointed that, unlike some competitors, OnPay doesn’t offer a mobile app for on-the-go payroll management and updates.

OnPay offers an affordable, all-inclusive payroll package for $40 per month plus $6 per user per month (whether contractors or employees). We appreciate that the platform lets you assign various admin permission levels, including external collaborators, which is an essential feature for businesses that pay independent contractors. It also provides helpful integrations with applications like QuickBooks, Vestwell and Mineral.

We really like OnPay’s sophisticated payroll reporting tool that allows you to add up to 50 data points to key reports, rearrange columns to highlight essential data and save multiple views tailored to different company stakeholders. This feature is invaluable for small businesses that must closely monitor their finances and make informed decisions about their freelance budget.

ADP Payroll: Best for Growing Businesses

  • ADP’s payroll offering is highly scalable, making it ideal for growing companies.
  • ADP’s built-in HR functionalities make it an excellent multifunctional software for small business needs.
  • ADP charges a fee per pay run, which may make it cost-prohibitive to pay freelancers more than once a month.
Editor's Rating: 9.2/10
Visit Site

ADP gives growing businesses essential tools to manage payroll and handle payroll taxes, especially for independent contractors. This robust platform allows you to pay employees and contractors in over 140 countries, making it an excellent choice for companies with a global freelance pool.

We appreciate that ADP lets you conveniently run payroll from your desktop, mobile device or phone. ADP charges a fee for every pay run, so budget-conscious businesses that use this platform may wish to limit the number of freelance payments they make throughout the month to save on this cost.

Companies with fewer than 50 employees have four distinct plan options with customized pricing. Beyond its base plans, ADP offers valuable additional features, including an employee self-service portal, direct deposit options and efficient tools to help you onboard new hires successfully. Advanced plans include additional helpful features for growing businesses that use independent contractors, including HR support, background checks, training and the ability to post job listings on platforms like ZipRecruiter.

ADP handles the creation and distribution of W-2 and 1099-NEC forms for employees and contractors and files them with the IRS on your behalf, saving businesses time and effort during year-end tax preparation. We especially like that anyone on your payroll can access their pay stubs and tax forms through ADP’s self-service app. This function streamlines the reporting process for independent contractors and staff.

Paycor: Best for Contractor Self-Service

  • Paycor offers analytics and reporting tools that help companies track turnover, team diversity and more.
  • Paycor’s website and mobile app are highly user-friendly and easy to navigate.
  • Paycor’s advanced analytics tools, report builder and compliance support options are available only at higher subscription tiers.
Editor's Rating: 9/10
Visit Site

Paycor provides easy-to-use online payroll software with a robust self-service portal. We appreciate that this portal allows independent contractors, freelancers and vendors on your payroll to access compensation data, update personal or financial details, monitor payments, access pay stubs, and more.

Paycor’s user-friendly HR tools make it an excellent option for businesses that work with independent contractors. It streamlines and simplifies complicated tasks, like hiring new freelancers and creating detailed payroll reports. We like that Paycor’s easy-to-navigate system offers helpful tips as you work on the platform. For example, it helps you correctly classify workers as W-2 versus 1099 so you don’t make costly mistakes when bringing in new contractors.

Paycor’s Basic plan covers essential payroll processing, payroll tax filing, mobile app access, various payment options, employee self-service and more. (You must contact the company for a custom quote.)

However, we were disappointed that Paycor’s lowest tier has limited support for wage garnishments and doesn’t include features like 401(k) integration and job costing. However, this may not be a concern if your business primarily has a freelance labor pool, as those functions are more relevant to W-2 employee payroll needs. For those seeking more comprehensive HR solutions, higher-tier plans offer additional features.

Paychex Payroll: Best for Businesses of All Sizes

  • Paychex offers a wide range of options for employee and contractor payments, including paper checks, online direct deposit and payroll cards.
  • In-house compliance experts consistently track legal and regulatory changes in states across the country.
  • Paychex doesn’t offer online onboarding tools or payroll apps.
Editor's Rating: 9.3/10
Visit Site

Paychex is a versatile payroll service suitable for businesses of all sizes. It’s an excellent, flexible option for businesses managing independent contractors and mixed workforces. Whether you have part-time and full-time employees or freelance workers on your payroll, you can have a weekly, biweekly, semimonthly or monthly pay schedule. Paychex can issue payments via direct deposit, paper checks or pay cards.

Paychex makes payroll management easy via desktop software or a mobile app for iOS and Android devices. Its self-service feature gives employees and contractors access to their pay stubs and year-end tax documents. The platform also boasts over 250 integrations with popular business software solutions, making connecting Paychex with other tools in your existing tech stack easy.

Paychex’s entry-level plan is affordable, starting at $39 per month and $5 per person per month. This plan covers payroll processing and tax preparation services; higher-level plans include garnishments and onboarding services. We particularly like that Paychex is committed to compliance; hundreds of experts monitor regulatory changes across the United States and integrate this knowledge into the software. This service is particularly reassuring for businesses with independent contractors, as worker misclassification and noncompliance with tax regulations for freelance payments can be costly.

Rippling Payroll: Best for Ease of Use

  • Rippling’s payroll and HR offerings make it an excellent all-in-one employee and contractor management platform.
  • The platform offers hundreds of built-in payroll workflow templates and software integrations for ease of use.
  • Rippling doesn’t offer a free trial or direct phone support.
Editor's Rating: 9.4/10
Visit Site

Rippling is an online payroll and HR platform that stands out for its easy-to-use interface that’s well suited to businesses that frequently pay independent contractors. The platform requires minimal training and simplifies the payroll process; payroll runs can be completed in as little as 90 seconds. You can set up direct deposits or issue paper checks to employees and freelancers, depending on your preference.

We like that Rippling helps you monitor crucial metrics, including total employee and freelancer hours and labor expenses, making tracking your freelance budget easy. The software offers automated workflows with Boolean rule processing, allowing for automated payroll approvals based on specific expense values or types. Rippling also integrates with over 500 third-party applications, enhancing payroll, tax preparation and other essential business functions.

Rippling advertises its rates as starting at $8 per person per month, but a custom quote is required for the base fee. All payroll customers must also use Rippling Unity, the vendor’s workforce platform that consolidates data related to payroll, onboarding, benefits administration, and time and attendance.

Costs of Payroll Services for Contractors

Pricing models for online payroll services are generally structured as monthly or per-payroll plans.

  • Monthly plans: Base fees for monthly payroll service subscriptions typically range from $30 to $150, plus a per-employee fee that may fall between $5 and $15 per month. Freelancers and contractors are considered “employees” under most payroll services, so you’ll be charged the same rate for any individual or vendor on your payroll. This structure means you can run payroll as frequently as needed for a fixed monthly cost – a cost-effective option for businesses that handle multiple monthly payroll runs or that prefer paying contractors after they complete a job.
  • Per-payroll plans: In contrast, per-payroll fee structures charge anywhere from $10 to $100 per payroll run plus an additional $2 to $15 per employee. This pay structure may make more sense for businesses that pay contractors only once per month.

Regardless of your pay structure, some providers may tack on extra charges for year-end tax services and initial setup.

TipTip
Before choosing a payroll service, ask vendors about overall costs, including additional fees, discounts and incentives. Knowing this information before committing to a service provider helps avoid surprise fees on your first bill.

Features of Payroll Services for Contractors

Payroll services offer an array of valuable features tailored to businesses with independent contractors and freelancers on their payroll. Here are some key features to consider:

Unlimited Payroll Processing

Look for services that allow you to run payroll as often as needed each month. This flexibility lets you pay independent contractors promptly after a project has been completed without incurring extra costs for additional runs.

Payment Options

Most online payroll services offer numerous payment methods, including direct deposit, paper checks and prepaid debit cards (or pay cards), to better accommodate the needs and preferences of your workforce.

Payroll Tax Calculation and Filing

If you also have W-2 employees on staff, payroll services should be able to calculate your business’s payroll taxes, handle corresponding paperwork, and file it with the relevant federal, state and local tax agencies. They also ensure that required payments are made on your behalf.

Year-End Tax Form Preparation

Businesses can rely on payroll services to handle year-end payroll tax form preparation and filing for employees and independent contractors, including 1099-NEC forms.

FYIDid you know
Your business must prepare and issue 1099-NEC tax forms for any contractor who received more than $600 in payments during the previous calendar year no later than Jan. 31. You must file those 1099 forms with the IRS. A full-service payroll provider can handle these tasks.

Employee Self-Service

Payroll software typically includes an online portal accessible to employees and contractors where they can conveniently view pay stubs and year-end tax forms.

Mobile Access for Team Members

Many payroll services offer dedicated mobile apps or mobile-friendly websites so you can manage independent contractor payments from any device.

International Payroll Support

While not all payroll software platforms support payments to overseas contractors, some specialize in facilitating payments to foreign workers, freelancers and clients. Vendors with international payment capabilities are ideal for businesses with global operations and independent contractors across borders.

Did You Know?Did you know
It’s crucial to understand how payroll works when independent contractors and freelancers are part of your business plan. The right payroll service for your business will handle payroll runs, tax filings, worker classifications and more.

Choosing a Payroll Service for Contractors

If you’re beginning the process of choosing a payroll service for a business that utilizes independent contractors, follow these steps to help you make the right decision:

1. Assess your budget and needs.

When selecting an online payroll service for your small business, begin by evaluating your payroll budget. Determine what your business can comfortably allocate for payroll processing and related services. Identify the features you need and those you can do without. Keep in mind that some payroll platforms are bundled with broader HR and human capital management software, which may not suit businesses seeking standalone payroll solutions.

You should also consider how frequently you process payroll: weekly, biweekly, monthly or per-project for freelancers. This choice can significantly impact your decision because some providers offer unlimited payroll runs and others charge per run.

2. Understand your business needs and priorities.

Make a list of your top priorities, wants and needs in your payroll software. For example, are same-day or next-day deposit capabilities critical for your freelance and contractor payments? Determine whether your business needs additional HR services integrated into the platform. Create a list of your payroll software requirements to guide you in your search for providers.

TipTip
Double-check that the payroll service you choose integrates with the time and attendance and accounting software you already use.

3. Compile a list of potential vendors.

Based on your specific feature requirements, create a list of potential payroll software providers through research and reading reviews from trusted resources like Business News Daily. Examine each vendor’s features and determine whether they align with your business needs; remove any platforms that do not meet your criteria.

4. Schedule demos where available.

Narrow your options to a few choices and schedule demos with these providers, if available. During demos, assess how the software functions and ask relevant questions. Inquire about the frequency of payroll runs, mobile app availability and employee self-service portal features. Sitting through product demos can also help you evaluate the software’s user-friendliness and intuitiveness.

5. Compare pricing structures and customer service.

Ask questions to gain a comprehensive understanding of the provider’s pricing structure and monthly expenses. Many payroll providers charge a base fee along with a per-employee fee. Ensure you fully understand the payment structure, setup charges and any additional fees for extra payroll runs; inquire about available discounts or incentives.

Next, research the quality of customer service offered by the company. Check the provider’s rating with organizations like the Better Business Bureau, assess customer complaints, and examine the availability of customer support channels, including phone, email and chat support. Be sure the provider’s support hours align with your business needs.

6. Narrow down your choices and make a decision.

After considering the pros and cons of each provider, identify your top choices based on your criteria. Once you’ve selected the best-suited vendor for your business, you can begin the setup process.

Advantages of Payroll Services for Contractors

Managing payroll efficiently is crucial for any business, especially those working with independent contractors and freelancers. Using a professional payroll service offers numerous advantages, including the following:

Payroll services can save you time and money.

Preparing payroll manually isn’t just time-consuming; it can also lead to legal issues with tax compliance if not done correctly. Using payroll software frees up valuable time and reduces expenses by streamlining tax preparation.

Payroll services ensure accuracy and compliance.

Payroll services ensure precise calculations and strict compliance with tax regulations, reducing the risk of costly errors, tax-related penalties and the need for paper documents. This can be especially helpful during tax season when filing annual 1099-NEC tax forms for contract workers.

Payroll services offer payment flexibility.

Payroll services offer various payment schedules, allowing businesses to compensate independent contractors and freelancers upon project completion or on a weekly, biweekly or monthly schedule.

Payroll services can facilitate employee self-service.

Online portals are a standard offering among payroll services; they allow employees and contractors to quickly access documents like pay stubs, W-2s and direct deposit details.

Did You Know?Did you know
Self-service portals can improve payroll accuracy. Payees can check pay stubs before payroll runs and inform business owners of any issues so they can preemptively correct errors.

Payroll services can enable mobile accessibility.

Many payroll services offer mobile apps or mobile-friendly websites for easy payroll management from smartphones and tablets. This increases flexibility and accessibility for busy business owners and workers.

Payroll services make contractor management easier.

The right payroll service can help your business manage remote workforces, especially those with freelancers or independent contractors, more efficiently. With a full-service payroll provider, you can ensure compliance with laws and regulations across various jurisdictions, including overseas.

Payroll Services for Contractors FAQ

Paying contractors differs from paying employees in terms of tax classification and legal requirements. Contractors are typically considered self-employed and are responsible for paying their own taxes. In contrast, employees must have certain taxes withheld and paid by the employer.

While you can handle freelancer payroll on your own, using a payroll service is recommended for best results. Payroll services streamline tax calculations, ensure compliance and save time, reducing the risk of errors and subsequent penalties.

Payroll software simplifies contractor management by providing payment flexibility, tax management and easy access to necessary documents. It allows efficient payment processing, tracks expenses and ensures compliance with tax laws, making contractor management more streamlined and more likely to be error-free.

Contractor payment frequency varies depending on your agreements. Some businesses pay contractors weekly, biweekly or monthly, whereas others pay upon project completion. Your payment frequency choice should align with your contractor agreements, business needs and payroll service provider’s capabilities.

Yes. Many online payroll providers support both employee and contractor payments. However, you must confirm that your chosen provider accommodates the specific needs of both groups and offers features for accurate classification and taxation.

Nicole Fallon
Contributing Writer at businessnewsdaily.com
Nicole Fallon has written hundreds of B2B-focused articles on topics such as marketing, business technology, leadership, and HR/organizational management. In addition to covering small business trends and software reviews, Nicole runs a digital marketing agency, where she and her team create high-quality content for a wide range of B2B and B2C brands.
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