Contractors

A contractor (also called a freelancer or independent contractor) is someone you pay for work who is not your employee. You do not withhold tax from a contractor’s pay and you do not pay employer taxes on it. Instead, at the start of the next year you send them, and the IRS, a Form 1099-NEC showing what you paid them, if it was over the reporting threshold.

You can pay contractors in Bokapsys in either of two ways:

Where	How you pay	Builds the 1099-NEC?
Payroll → People → Contractors	Record each payment on the contractor’s page. Each payment posts to your books straight away.	Yes, for contractors ticked Gets a 1099-NEC at year end.
Invoicing (AP-AR) → Vendors	Enter their bills and record payments against them, like any supplier.	Yes, for vendors ticked Send this contractor a 1099.

Use one or the other for each contractor, not both, so their payments are never counted twice. This page covers both.

Before you start

Your role can manage contractors (for the Contractors tab) or vendors (for the vendor route). See Team and roles.
Ask each contractor for a completed Form W-9 (Request for Taxpayer Identification Number). It gives you their legal name, address and tax number:
- an SSN (Social Security number) if they work as an individual or sole proprietor, or
- an EIN (Employer Identification Number) if they have a business, or
- an ITIN (Individual Taxpayer Identification Number) if they are not eligible for an SSN.
Moving from another provider? You can import contractors from a file. See Switching providers.

Add a contractor

Open Payroll → People and click the Contractors tab.
Click Add contractor. The Add contractor page opens.
Fill in the sections below.
Click Save. You see Contractor added, and the contractor gets a number.

Who they are

Field	What it means	Example
Business name	The legal name on their W-9. Leave blank for an individual.	Rivera Design LLC
First name / Last name	For a contractor working in their own name.	Ana / Rivera
Email, Phone	How to reach them.	ana@example.com

Enter either a business name, or a first and last name.

Tax details

Field	What it means	Example
Tax ID type	EIN (for a business), SSN (for a sole proprietor), ITIN or Foreign (a tax ID issued outside the US).	EIN
Tax ID	Their full tax number from the W-9. It is stored encrypted and only the last four digits are ever shown. When you edit, leave it blank to keep the number on file.	98-7654321
W-9 received	The day their signed W-9 reached you. Keep the form itself on file.	01/12/2026
Gets a 1099-NEC at year end	Tick for anyone you pay for services who should get a 1099-NEC (payments of $2,000 or more in 2026).	Ticked
Backup withholding applies	Tick only if the IRS told you to withhold 24%, or they did not give you a correct tax ID.	Unticked

If only the last four digits of a tax ID are on file (for example from an older record), the hint says so. Enter the full number, or a 1099-NEC can’t be filed for them.

Address and status

Fill in Country, Address line 1, Address line 2, City, State and ZIP code from the W-9. For a US contractor who gets a 1099-NEC, the state is required. Status is Active (can be paid), Inactive or Blocked.

If someone else changed the contractor while you had it open, a note asks you to Reload and make your change again.

Record a payment

Record each payment as you make it, so the year-end 1099-NEC and your books are both right.

Open the contractor from Payroll → People → Contractors.
Under Payments, click Record payment. The Record payment window opens.
Fill in the fields below and click Record payment. You see Payment recorded with the amount and date.

Field	Required	What it means	Example
Date paid	Yes	The day you paid them. It can’t be in the future.	03/15/2026
Amount (USD)	Yes	What you paid.	1250.00
Paid from	No	The bank account or credit card the money came from.	Operating checking
Method	Yes	Bank transfer, Check, Wire or Other.	Bank transfer
Expense account	Yes	The expense account in your chart of accounts this work is charged to.	Professional Fees
Reference	No	An invoice or check number.	INV-204
Note	No	Anything you want to remember.	March design work

What happens in your books. The payment posts straight away on the date paid: the expense account goes up and the bank account goes down. The month must be open in your books.

Payments by card. A payment made from a credit card account is marked Card, not on the 1099-NEC, and shown separately as Paid by card. Card payments are reported to the IRS by the card company on a Form 1099-K, so they are left out of your 1099-NEC.

See what you have paid

Choose a year at the top of Payments. You see:

Paid in [year]: the total that counts toward their 1099-NEC, with a note saying whether it has reached the $2,000 reporting threshold.
Payments: how many payments you recorded.
Paid by card, if any.
The list of payments, with Date, Amount, Paid from, Method, Account, Reference and Status.

Payments count toward the year of the date you paid them, not the date of the work or the invoice.

Void a payment

If a payment was recorded by mistake, click Void on its row, give a Reason and click Void payment. It is taken off the 1099-NEC and the entry in your books is reversed. The payment stays in the list, marked Voided.

Contractors paid as vendors

If a contractor is linked to a vendor, their Payments card says they are paid as that vendor, and Record payment is not offered. Record their payments as bill payments to the vendor instead; those payments appear on the card as Bill payment and count toward the 1099-NEC.

Pay a contractor as a vendor

If you prefer to pay a contractor through bills, set them up as a vendor.

In the sidebar, open Invoicing (AP-AR) → Vendors. Add the contractor if they are not there yet (see Vendors), and open their detail page.
Fill in Legal name, Tax ID / VAT (their full SSN, EIN or ITIN) and Tax ID type.
Tick Send this contractor a 1099. The note under it reads: “Tick this for contractors and freelancers you pay. Companies you buy goods from usually do not need one.”
Fill in the Address card with the address from their W-9.
Click Save.
Enter their bills under Bills, then use Record payment on each bill when you pay it. See Bills.

Most vendors do not need a 1099. The box is unticked by default because companies you buy goods from, and most corporations, are not sent one.

Only recorded payments count. Bokapsys adds up the payments you recorded to that vendor in the calendar year, by the date paid. A bill you entered but never paid, or paid in January of the next year, does not count for this year.

When a 1099-NEC is needed

For payments made in 2026, a 1099-NEC is needed when you paid a contractor $2,000 or more in the year. This is the 2026 figure in the app. Bokapsys does not prepare a 1099-NEC for a contractor you paid less than that. Ask your accountant about any special cases.

At year end you produce the 1099s from Tax. Bokapsys prepares the forms and the upload file for the IRS’s own 1099 filing site; it does not send anything to the IRS for you. See Contractor 1099s.

Missing tax numbers

If a contractor or vendor marked for a 1099 has no full tax number on file, Bokapsys does not prepare their 1099. It lists them as missing a tax number when you generate the forms, so you can chase the W-9. Add the number and generate the forms again.

The Contractors list

Payroll → People → Contractors shows Contractor #, Name, Email, Tax ID (last four digits), W-9 received, 1099-NEC and Status. Search by name, or filter by status.

How to check it worked

Open the contractor: Tax ID shows “On file, ending …”, W-9 received has a date, and Gets a 1099-NEC at year end is ticked.
Paid in [year] on their Payments card matches what you paid them, excluding card payments.
In January, when you generate 1099s, the contractor appears with that total, and is not on the missing-tax-number list.

Common mistakes

Mistake	What happens	Fix
Paying the contractor outside Bokapsys without recording the payment	Their 1099 total is too low.	Record each payment, with the real payment date.
Recording the same contractor as a vendor and on the Contractors tab	Their payments could be counted twice.	Pay each contractor one way only.
Ticking the 1099 box for a supplier of goods	A 1099 is prepared that is not needed.	Untick it for that vendor.
Paying a contractor through payroll as an employee	They are taxed as an employee and get a W-2, not a 1099.	Decide the classification first; ask your accountant if unsure.