Cheapest payroll for 1099 contractors in 2026
If you only pay contractors, you do not need full payroll. Contractor-only plans charge nothing until you actually pay someone, with 1099-NEC filing included.
Why contractor payroll is simpler than employee payroll
No FICA employer share
Contractors pay their own self-employment tax. You skip the 7.65% employer FICA contribution that applies to W-2 employees.
No federal income withholding
Contractors handle their own quarterly estimated tax. You issue gross payment and a 1099-NEC at year-end.
No benefits or workers comp
Contractors are responsible for their own health insurance, retirement, and workers comp. You skip the admin entirely.
Simpler 1099-NEC at year-end
One form per contractor paid more than $600 in a year. Filed with the IRS by January 31, copy to the contractor.
Contractor-only plan comparison
| Provider | Base | Per contractor | 1099-NEC filing | Multi-state |
|---|---|---|---|---|
Square Payroll Contractor-Only Cheapest in months you do not pay anyone. Strong if you also use Square POS. | $0 | $6/contractor when paid | 1099-NEC included | All 50 states |
Gusto Contractor-Only Polished employee app and onboarding flow. Same price as Square without the POS dependency. | $0 | $6/contractor when paid | 1099-NEC included | All 50 states |
Wave Payroll Only worth it if you are already on Wave Accounting. | $20/mo | $6/contractor | $6/form | Self-service in 36 states |
Patriot Basic Treats contractors as employees on the per-head fee. Cheapest base, but the per-form W-2 fee structure makes it expensive at year-end. | $17/mo | $4/contractor | $25/form set | All 50 states |
If you have W-2 employees AND 1099 contractors
Contractor-only plans require contractor-only rosters. The moment you hire a W-2 employee, you need a full payroll plan. The cleanest path is OnPay or Gusto Simple, both of which let you mix W-2 employees and 1099 contractors on a single bill: pay the regular per-employee fee for W-2s and the same per-contractor fee for 1099s.
Square Payroll also supports mixed rosters but charges the higher full-service per-head fee for W-2 employees ($35 + $6) and contractor rate for 1099s.