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Finding the right contractor for your business takes time and energy. With freelancers, contractors, or consultants, you want them to hit the ground running—ideally yesterday, right?
You need to treat your contractor like you would any employee when they first begin. You can’t just send them the project and assume they can start right that second. There’s still contracts to sign, company information to go over, and tax and payment documentation to complete.
Having a clear onboarding process can make it much easier for your contractors to do the job you hired them to do. But it also saves you headaches in the future by ensuring you have reliable, up-to-date information for legal and administrative purposes so that come tax season, you’re ready.
Here’s how to create an onboarding process that makes contractors feel welcome and ensures you have what you need for a smooth tax season:
Collect the information you need for tax season right away
When you work with a contractor or consultant, you need to file a 1099-NEC form if they earn more than $600 in a calendar year from your business. That process looks like this:
- Request a W-9 from the contractor
- Verify the Taxpayer Identification Number (TIN)
- Calculate each non-employees full payment total
- Communicate with each contractor if there is missing information
- File a 1099-NEC form for each contractor with the IRS
The problem? The IRS has a deadline of January 31 to file these 1099-NEC forms. Failure to do so can result in hefty fines—up to $330 per form in 2024—which you’ll incur if you’re late or have inaccurate information.
Get ahead of this deadline by collecting a W-9 form and verifying the TIN right away. Your contractor already is going to be filling out payment information, reading through company policies, and conducting the beginning phases of work. Don’t wait until they’re in the thick of their project or engagement to do your administrative due diligence.
Standardize your onboarding process for each contractor
Every company has their own way of doing things. Make it easier for your contractor to get up to speed quickly by standardizing a welcome packet that includes the information they need to get started—similar to what you’re already sending to your full-time new hires—that includes:
- Where to send their completed W-9 and payment information
- Instructions on where and how to send their invoice
- A place to sign their contract, plus any other documentation, like an NDA
- An overview of basic company-wide policies, your company values, and mission statement
- A who’s who guide for asking questions or getting important information to complete their project
- Log in information for tools they’ll need to access to complete the project, like project management tools like Asana or Notion, communication tools like Slack or Teams, and any project-specific tools
Then, you can send it altogether to the contractor in one go, along with any team-specific or project-specific information they need to get the job done. That way, your contractor can send over all of the paperwork right away, and you can confirm those details before the work gets going.
Store your contractor information in one place
One of the biggest challenges for tax season with contractors is that HR and accounting professionals are stuck using traditional systems that aren’t designed for work with W-9 employees.
That means come tax season, your team is cobbling together information from multiple tools that don’t talk to one another. They’re stuck digging through DocuSign or their emails (!) to find W-9 forms, going into the payroll system to add annual payout totals, and then going back and forth with the contractor to figure out if anything is missing or inaccurate.
It takes forever. And it takes your busy team away from more pressing day-to-day tasks (not to mention prepping for the rest of tax season with your full-time employees.) You might be able to handle this with one or two contractors, but if your business has ten or more? Talk about a huge headache.
Instead of trying to stitch together accounts payable and payroll with a spreadsheet, you need a purpose-built tool to manage your contractor team. That way, all of the information you need for tax season is in one place, so you can create 1099-NECs easily.
Automate your contractor onboarding process
You’ve found a contractor and you’re ready for them to sign on the dotted line. Make it easier on yourself and on your new teammate by automating the administrative work—so your team can truly hit the ground running. “Wingspan has been a game-changer for our business, saving my team hundreds of hours onboarding inspectors, processing invoices, and running reports,” says Jake Ciorciari, EVP of Operations at Majestic.
With Wingspan, you can automate every step of the contractor onboarding process. You don’t need to send endless emails to your contractors to collect each piece of information, or worry that something will get missed in the exchange. Just share each contractor’s email once, and our platform will automatically request their W-9s and cross-check their TINs with the IRS database. And because you can pay contractors directly on our platform, we auto-calculate payment totals to generate accurate, reliable 1099-NEC forms in one click.
It really can be that easy. Start onboarding your contractors with Wingspan today >
