Short answer
It depends on how much control you have over how, when and where the person works. If you direct them like an employee, they are usually an employee — even if you pay them in cash or call them a contractor.
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If you direct the work like an employee, they are usually an employee — even if you pay them in cash or call them a contractor.
Reported on Form 1099-NEC, which is due January 31.
Contractors are reported on Form 1099-NEC, due January 31. For payments made from 2026 on, you report when you pay $2,000 or more during the year (it used to be $600). Always get a W-9 before the first payment.
Reporting threshold from 2026
$2,000
It used to be $600.
Get a W-9 before the first payment.
We review how you work with each person, tell you how they should be classified, and fix any misclassification before it turns into a penalty — including payroll corrections and 1099 filings.
See our payroll service