Whether you run a gig marketplace full of independent contractors or are thinking of hiring your first freelancer for a short-term project, paying 1099 workers can present some unique challenges, from manual processes that create administrative headaches to tax differences that need to be handled with care. 

In order to create a payment process that’s efficient for all of your workers, it’s crucial to understand what these unique 1099 payroll challenges are, and how to sift through some of the best 1099 payroll options to find the solution that makes navigating them easier for your company. 

Challenges of Paying 1099 Workers

If you’re new to paying 1099 workers or already familiar with some of the headaches that can accompany the process, here are some of the most common challenges in paying independent contractors.

Hybrid workforces often mean disparate payment solutions

Due to the overwhelming growth of the contingent workforce, more companies than ever are dealing with a hybrid workforce of both W-2 and 1099 workers. The nature of this hybrid scenario can cause administrative headaches since many payroll solutions don’t allow you to send payments to both types of workers, meaning you need to utilize multiple platforms or systems to ensure your entire workforce is paid.

This not only creates additional administrative hassle but can also create additional costs to your company by having to run a handful of 1099s through a separate system. 

Read how Three15 Studios saved money by paying their 1099s and W-2s from the same platform. 

Potential for tax penalties

As independent contractors become more prevalent in every business, it’s crucial to ensure you classify them correctly. There are specific requirements a worker must meet to qualify as an independent contractor and not just a standard W-2 employee (review worker classification the basics here)—and if you misclassify even one worker, you could face tax consequences and penalties.

You’re also required to provide a 1099-NEC to independent contractors by January 31st of each year, and there are potential fees and penalties for each 1099 that contains errors or is turned in late. This additional tax filing complication can prove to be a headache for some businesses, resulting in added stress and potential fees.

Slow, manual processes

If you have a few 1099 contractors on your team, you may be used to paying them out manually since many solutions require a separate platform, as we discussed above. This means that each contractor you hire requires manual invoices that must be approved and processed—which can create a hassle for you and your entire team.
‍
If you’re currently paying them in paper checks or net 30, 60, or even 90 day terms, you’re slowing down your payroll—and potentially making it easy for your contractors to look elsewhere for faster pay.

The Best 1099 Payroll Options: What to Look for in a Solution

If you’ve ever wondered “what’s the best way to pay independent contractors?” you’re not alone. With so many options available, it’s not always easy to know what the best 1099 payroll options are for your business. In general, looking for these three things can help you solve the challenges we discussed above.

One streamlined platform

Think about your current business state: for both your current situation and into the future, it will become increasingly important to have a plan in place to hire and pay 1099 contractors—regardless of your industry. 

Many 1099 payroll options don’t offer this functionality, leaving you to continuously perform separate, manual payouts to your contractors.

With a streamlined payments platform like Branch, you can swiftly pay out both W-2 and 1099 workers—all from the same centralized hub. Plus, Branch’s platform can grow and scale alongside your business, regardless of how many contractors or employees you add. 

Want to learn how Branch can power payments to your 1099 workforce? Read more here.

Tax filing help

Dealing with the tax complexities of having 1099 contractors on your payroll can feel like a burden. Even some of the best 1099 payroll options out there don’t provide any help in this area, leaving you to deal with 1099 tax complexities on your own.

Branch’s comprehensive payments platform takes that burden off of your plate by helping issue 1099-NEC forms to you and your workers when necessary—and even filing the forms on your behalf.

Fast, automated payouts

Independent contractors have plenty of choices for where to seek out gig work these days—and they’re all at their fingertips, with new apps and gig marketplaces sprouting up all the time. And gig workers, by and large, want to be paid faster. They don’t want to wait for invoices to be processed and checks to be cashed. In fact, 80% of gig workers say they’d choose one platform over another if it could pay them instantly and without fees. 

Many 1099 payroll options still include sluggish processes, like invoices and check issuing.

With Branch’s digital payments platform, you can offer your gig workforce fast, flexible payout options—even right after each shift is completed. No manual processes, separate payroll systems, or old-fashioned check issuing required.

Standardize and Simplify Contractor Payments

Whether you have a single contractor on your payroll or thousands, the best 1099 payroll options for your business may just be digital platforms that allow you to make, manage, and track all your worker payments from one centralized hub. Branch does all of this, providing fast, flexible payouts to your 1099 contractors—at no cost to you or your workforce.

By simplifying your payments for 1099 contractors, you reduce admin time and room for error. And with the option to push contractor payments at any time—even nights, weekends, or holidays—Branch wins out among the best 1099 payroll options to help you solve payment complexities with ease. 

Learn more about how Branch makes 1099 payments fast, flexible, and easy.