How to run an off-cycle payroll for 1099 contractors

7shifts allows you to pay contractors outside of your regular payroll schedule to accommodate specific projects, mid-cycle milestones, or to record historical year-to-date (YTD) earnings for tax reporting. Using 7shifts Payroll ensures these payments are tracked accurately for year-end tax filings.

Things to Know

• 7shifts Payroll does not withhold taxes for 1099 contractors, but the system tracks these payments for year-end 1099-NEC filing.
• A contractor must not have "Blocked for Payroll" status and have a completed onboarding package before they can be added to a payroll run.
• Standard processing timelines (2-day or 3-day) apply to direct deposits. Select Paper Check for immediate manual payouts or recording purposes.

Run an off-cycle payroll for contractors

1. Log in to 7shifts as Admin and navigate to Payroll > Run Off-Cycle Payroll.
2. Select an entry method: 
   1. Choose Sync Timesheets and Tips to pull recorded hours. This method allows you to pull data from one of your last 20 pay periods. While the data syncs automatically, you must still manually add each employee you wish to pay to the run.

   2. Choose Manual Entry for one-time fees and project milestones. This method allows you to choose any date range and manually enter all figures. 

      

3. Set the Pay Period for the work period being paid.
4. Click Select payment method.
   • Standard Processing (2 or 3-day)
     Follows your regular payroll processing timeline, based on your account's approved processing time.
   • Next Day Rush
     Only available to accounts approved for 2-day processing. This option ensures employees are paid the next business day.
   • Paper Checks
     You can choose to issue paper checks for immediate payout. Use this option if you are paying contractors manually or recording a previous payment.
5. Click Review and run payroll.

6. Click Add an employee and search for the specific contractor(s) you wish to pay.

   

7. Enter the earnings on the Review Hours and Earnings page. If you are recording YTD earnings paid outside of 7shifts, enter the amount and ensure the method is set to Paper Check to prevent a duplicate bank withdrawal.

   

8. Click Review time off and then Preview Payroll to confirm that no taxes are being withheld for the contractor.
9. Click Submit Payroll.

FAQ

Can I pay W-2 employees and 1099 contractors in the same off-cycle run?

Yes. You can add both W-2 employees and 1099 contractors to a single off-cycle run by selecting them individually during the "Add an employee" step.

Employees will appear under the Employee tab and contractors will appear under the Contractor tab. 

Why isn't my contractor appearing in the list to add to the off-cycle run?

The worker must be classified as a "Contractor" in their employee profile, must have completed their 7shifts Onboarding, and must not have a "blocked for payroll" status. 

Confirm their payroll status by going to Payroll > Team > Employees.

How do I record payments I made to a contractor before I started using 7shifts?

Pay the contractor in an off-cycle payroll using the Manual Entry method and the Paper Check payment option. This logs the earnings for 1099-NEC reporting at year-end without attempting to withdraw funds from your bank account for a duplicate payment. 

Since this is for record-keeping purposes only, you don’t need to print or distribute the check. This ensures the YTD earnings are logged without making an additional payment.