To pay contractors with Gusto, add each person under People as an individual or business contractor, let them enter their W-9 details and bank account, then run a payment from Pay > Pay US contractors by entering hours or a fixed amount and submitting before the debit deadline. Gusto deposits the money by direct deposit (or lets you print a check), keeps the payment history, and files and delivers Form 1099-NEC at year-end for eligible contractors when your company has Form 8655 on file. As of October 30, 2026 you pay the plan base plus $6, $12, or $22 per contractor only in months you pay them. New sign-ups choose Simple, Plus, or Premium—the Contractor Only plan closed to new customers on October 1, 2026.
Research note: Plan prices, contractor billing rules, payment speeds, and product steps were checked on Gusto’s pricing page, the Gusto Help Center contractor article, the plans overview, the October 2026 plan update, and the direct deposit speeds article on October 30, 2026. The Form 1099-NEC threshold comes from IRS.gov and the December 2026 Form 1099-NEC instructions. This guide is educational and is not tax, legal, or accounting advice. Some links may be affiliate links.
Quick answer: can you pay contractors with Gusto?
Takeaway: Yes, on every current Gusto plan, and you do not need W-2 employees to use it.
Gusto’s Help Center says you can add US contractors, invite them to onboard, and pay them even if you do not run employee payroll. The fit is strongest when you pay the same freelancers repeatedly, want W-9 and payment history in one place, or already run payroll. If you pay one freelancer twice a year, bank ACH plus a spreadsheet may be enough—see paying 1099 contractors without payroll software.
| Your situation | Likely best path |
|---|---|
| Employees plus recurring contractors | Gusto: contractors sit next to payroll on the same plan |
| Contractor-only, 3 or more paid most months | Gusto Simple, if the $49 base is worth the 1099 and onboarding help |
| One or two freelancers, rare invoices | Bank ACH or bill pay plus a year-end 1099 process |
| Payee behaves like a vendor (invoices, no onboarding) | Bill pay such as Melio, or your bank |
| The role looks like an employee | Stop and review W-2 vs 1099 before choosing any pay tool |
What does Gusto charge to pay contractors in 2026?
Takeaway: Budget the plan base plus $6 (Simple), $12 (Plus), or $22 (Premium) for each contractor you actually pay that month.
Gusto’s public pricing page (checked October 30, 2026) lists three plans: Simple at $49/month + $6 per person, Plus at $80/month + $12 per person, and Premium at $180/month + $22 per person. US contractors are billed at the per-person rate only in months you pay them—multiple payments to the same person in one month still count as one fee. An idle contractor profile costs nothing until you pay them or record a historical payment.
One change still trips people who read older guides. The standalone Contractor Only plan ($35/month + $6 per contractor) no longer appears on Gusto’s pricing page. Gusto’s Help Center states it closed to new customers on October 1, 2026; existing contractor-only accounts keep access. If you are signing up now, a contractor-only business should price Simple first.
| Contractors paid this month | Simple ($49 + $6) | Plus ($80 + $12) | Premium ($180 + $22) |
|---|---|---|---|
| 1 | $55 | $92 | $202 |
| 3 | $67 | $116 | $246 |
| 5 | $79 | $140 | $290 |
| 10 | $109 | $200 | $400 |
A hybrid example: two W-2 employees and three contractors paid the same month on Simple comes to $49 + (5 × $6) = $79; employees-only months drop to $61. Global contractors have no monthly per-contractor fee—Gusto charges a service fee and FX per payment (including $5 to a US-based bank account on the pricing page)—so confirm add-on terms before promising an overseas payout date.
Plus fits when you need multi-state payroll, next-day pay included, time tracking, or contractor invoice management. Premium adds same-day and instant pay (eligibility applies), a Premium Account Partner, and compliance tools. For small-team cost context, see best payroll software for 1 to 5 employees, OnPay pricing, and payroll software for S corps.
What do you need before you add a contractor in Gusto?
Takeaway: Gusto only supports US contractors with a valid TIN, a US work address, a US bank account, and no backup withholding.
Check these items first, because Gusto will stop you later if one is missing. According to the Help Center, an individual contractor needs a valid Social Security number or ITIN and must be at least 13. A business contractor needs a federal EIN. Every US contractor also needs a US work address for year-end filings and a US bank account for direct deposit. Gusto does not support backup withholding or state-specific contractor withholding, so a payee who requires either has to be handled outside Gusto.
- Classification decided. Gusto states plainly that it cannot tell you whether someone is a W-2 employee or a 1099 contractor. Use our W-2 vs 1099 guide and IRS guidance first.
- Agreement or statement of work. Gusto can generate a contractor agreement for individual US contractors during setup, or you can upload your own.
- Company bank account verified. Contractor payments debit the same account as payroll. Some banks block the first debit until you approve Gusto as a payee.
- Form 8655 signed. Gusto files 1099s only when your company has a signed Form 8655 (Reporting Agent Authorization) on file.
How to pay contractors with Gusto in 7 steps
Takeaway: Setup takes one sitting; after that a payment run is a table you fill in and submit.
Step 1: Add the contractor under People
Sign in, go to People, and click Add person. Enter the legal name and preferred first name, then pick the worker type. Individual contractor is a person working under contract; business contractor is a registered business such as an LLC or corporation. Choose United States as the country and use the contractor’s personal email, not a company address. Under onboarding options you can attach a contractor agreement and, for individuals, a background check. On the next screen add the contract start date and, optionally, a job title, manager, and hourly rate. Skip the hourly rate if you pay flat amounts. If you are adding several people, Gusto also accepts a CSV upload or a bulk-entry table.
Step 2: Let the contractor onboard and sign the W-9
Click Send and continue so the contractor gets an email to enter their own SSN, ITIN, or EIN, address, and bank details. That keeps sensitive numbers out of your inbox. The contractor completes an electronic Form W-9 inside Gusto. Once signed, it cannot be edited; a correction means a new W-9 uploaded to their profile. You can view it under People > contractor > Documents > Taxpayer Identification (Form W-9). If the contractor uses a paper W-9 instead, you must keep the signed copy. Our guide to collecting a W-9 from a contractor covers name and TIN mismatches.
Step 3: Set the pay type
Hourly contractors need an hourly rate on their profile if you want Gusto to calculate pay from hours or sync time tracking. Fixed-rate contractors can be paid any flat amount at any time. You can change this later under People > contractor > Pay > Compensation. For a one-time payment, Gusto lets you combine hours and a flat amount, such as regular hours plus a project fee. Automated recurring payments still cannot mix hourly and flat amounts.
Step 4: Run the payment
Go to Pay and, under More options, choose Pay US contractors. The Edit payments table lists every active contractor. Enter hours or a fixed amount, plus any reimbursements, tips, invoice number, or memo the contractor will see. Instead of typing, you can import a CSV from Gusto’s template or upload contractor invoices (PDF, JPG, or PNG) and let Gusto read the amounts—then check each matched name and total. Click Review summary, confirm the totals and debit date, then Submit. The same steps work in the Gusto mobile app.
Step 5: Automate recurring payments (optional)
For retainers, set up an automated payment from the same Pay screen. You pick the contractors, a frequency (weekly, every other week, twice a month, or monthly), and the first debit date, then preview future paydays and turn it on. Keep the full amount in your bank on each debit date; Gusto may turn automation off, and will email you, if a debit or verification fails. Same-day and Instant Pay are not available for automated payments.
Step 6: Record payments you made outside Gusto
If you paid a contractor by bank transfer or card earlier in the year, record it with Record a non-Gusto payment so the 1099-NEC reflects the full-year total. No money moves. Gusto charges the normal per-contractor fee for any month in which you enter a historical payment, and the entries must be in before Gusto’s early-January deadline. Historical payments alone do not trigger a 1099 unless your account also ran at least one real contractor payment or payroll that tax year. A contractor payment tracking spreadsheet makes this step painless.
Step 7: Let Gusto file Form 1099-NEC at year-end
Gusto files and delivers electronic 1099-NECs to eligible contractors. Under IRS rules, the reporting threshold for nonemployee compensation is $600 for payments made before 2026 and $2,000 for payments made in 2026, with inflation adjustments after that. Some help pages still quote $600, so use the IRS figure for the payment year. Most corporations, including LLCs taxed as C or S corporations, do not need a 1099-NEC for services (attorney payments are a common exception). The form is generally due to the IRS and the contractor by January 31; for 2026 payments that date falls on a Sunday, so the next business day is February 1, 2027. Gusto does not prepare 1099-MISC or other 1099 types. For a manual walkthrough, see how to file Form 1099-NEC, best 1099 software for small business, and the tax compliance hub.
How fast do Gusto contractor payments arrive?
Takeaway: Contractor payments follow your payroll speed, and eligible runs can use next-day, same-day, or instant pay depending on the plan.
Gusto says US contractor payments process as fast as your employee payroll, and direct deposits usually land by 5 p.m. local time on payday. Every plan includes 4-day and 2-day pay. Plus and Premium include next-day pay; on Simple it is an add-on at $15/month + $3 per person. Premium includes same-day and instant pay when eligible. On Simple and Plus, Gusto’s speeds article lists Same-day Pay at $90 per payroll or $45 per contractor payment run, and Instant Pay at $100 per payroll.
Faster speeds appear only when eligibility rules are met: direct deposit for every contractor in the run, more than 24 hours since onboarding, admin 2-step verification, earliest available payday, and for Same-day Pay a submit before 11 a.m. PT Monday–Friday. Automated payments cannot use Same-day or Instant Pay. Always read the debit date on the review screen before you submit.
Contractors can be paid by direct deposit or check at the same cost. Gusto does not mail contractor checks; you print and hand them over. Prepaid debit cards are not supported. You can cancel a payment that has not processed yet, and you can adjust one that processed but has not reached the contractor’s bank. Once the contractor has the money, Gusto cannot reverse it, and you have to recover the funds directly.
Gusto vs Melio or bank ACH for contractor payments
Takeaway: Use Gusto when contractors are part of your workforce records; use bill pay or ACH when they behave like vendors.
Gusto wraps each payment in onboarding, an e-signed W-9, payment history, and 1099-NEC filing. Melio treats a contractor more like a vendor bill—better for freelancers who send invoices and never need a workforce profile. See our Melio contractor guide (soft affiliate: Melio), the comparisons hub, and payroll matchups like Gusto vs QuickBooks Payroll, Gusto vs BambooHR, and Gusto vs Rippling.
| Need | Gusto | Melio or bank ACH |
|---|---|---|
| Self-onboarding with e-signed W-9 | Built in | Manual (email or portal) |
| Same system as W-2 payroll | Yes | No |
| Year-end 1099-NEC filing | Gusto files and delivers (Form 8655 needed) | You or a 1099 e-file service |
| Cost for one rare payment | $49+ base plus $6 that month | Often lower; check transfer fees |
| Vendor-style bills with approvals | Contractor invoice tools on Plus | Core use case for bill pay |
Common mistakes when paying contractors in Gusto
Takeaway: Most problems trace back to classification, missing W-9 data, or bank details changed without a callback.
- Treating the contractor setting as a classification decision. The IRS looks at behavioral control, financial control, and the relationship. A software toggle changes none of those.
- Paying before onboarding finishes. If the TIN or address is missing, the year-end form will be wrong or late.
- Assuming the old Contractor Only price. New sign-ups now start on Simple or higher, so the base is $49, not $35 or $0.
- Forgetting the per-month fee on historical entries. Recording an outside payment still bills that contractor for the month.
- Using $600 for 2026 payments. The 2026 threshold is $2,000 per IRS; keep W-9s regardless so you can file when required.
- Changing bank details on an email request. Confirm changes by phone at a number you already have. Contractor payment fraud looks just like vendor fraud.
- Expecting Gusto to handle backup withholding. It does not; work with your CPA if a payee triggers it.
Checklist before your first Gusto contractor payment
Takeaway: Walk this list once before the first debit so W-9, Form 8655, and funding are not last-minute surprises.
- Confirm the person is a contractor based on facts, with professional help if unclear.
- Check eligibility: SSN/ITIN or EIN, US work address, US bank account, no backup withholding.
- Pick the plan using the cost table above and your expected monthly contractor count.
- Sign Form 8655 in Gusto so year-end filing is authorized.
- Add the contractor under People and send the onboarding invite to a personal email.
- Verify the e-signed W-9 under Documents before the first payment.
- Set hourly rate or flat pay, then run the payment from Pay > Pay US contractors.
- Check the debit date and fund the account; cancel before the debit if something is off.
- Record any payments made outside Gusto before the early-January deadline.
- Reconcile year-to-date totals in December so 1099-NEC figures match your books.
FAQs
Can you pay 1099 contractors in Gusto without running payroll?
Yes. Gusto’s Help Center says you can pay US contractors even if you do not run employee payroll with Gusto. New customers now choose Simple, Plus, or Premium, because the standalone Contractor Only plan closed to new sign-ups on October 1, 2026.
How much does Gusto charge per contractor?
As of October 30, 2026, $6 per contractor on Simple, $12 on Plus, and $22 on Premium, on top of the $49, $80, or $180 monthly base. You are billed for a contractor only in months you pay them, however many payments you make that month.
Is the Gusto Contractor Only plan still available?
Not for new sign-ups. Gusto’s Help Center states the plan closed on October 1, 2026. Existing accounts may keep it; check your plan settings. New contractor-only businesses should price Simple first.
Does Gusto collect W-9s from contractors?
Yes. Contractors complete an electronic Form W-9 during onboarding, and you can view it on their profile under Documents. A signed W-9 cannot be edited, so corrections require a new form uploaded to the profile.
Will Gusto file my contractors’ 1099-NEC forms?
Gusto files and delivers electronic 1099-NECs to eligible US contractors when your company has a signed Form 8655 and processed at least one contractor payment or payroll that year. It does not file 1099-MISC or handle backup withholding.
What is the 1099-NEC threshold for 2026?
For payments made in 2026, the IRS threshold is $2,000. It was $600 for payments made before 2026. Most payments to corporations, including LLCs taxed as S or C corporations, are exempt (attorney payments are a common exception).
How long does a Gusto contractor payment take?
It follows your payroll timeline. Plus and Premium include next-day pay; Simple uses the standard window unless you add next-day pay for $15/month + $3 per person. Eligible contractor runs can also use Same-day or Instant Pay when those options appear (included on Premium; priced per run on Simple and Plus). Deposits usually arrive by 5 p.m. local time on payday.
Can I pay international contractors with Gusto?
Yes, through Gusto’s global contractor payments add-on, which covers contractors in more than 120 countries with no monthly per-contractor fee. Gusto charges a service fee and foreign exchange costs per payment, and non-US contractors are handled outside the US 1099 process.
Next step
If you pay contractors most months, or you already run payroll, set up Gusto on Simple, add one contractor, and run a small test payment before moving the whole roster. Price the plan against your real monthly contractor count using the table above, and sign Form 8655 early so year-end filing is covered.
If your freelancers behave more like vendors, compare the bill-pay route in can you pay contractors with Melio. For employee payroll decisions alongside contractors, start with the payroll hub, the new-hire payroll checklist, and Gusto vs QuickBooks Payroll.