Pay independent contractors

United States

Because of their special tax status, contractors are considered vendors in Wave. This keeps your accounting accurate and your business compliant. When you pay an independent contractor, you log it as a purchase from a vendor by using bills.

Create a contractor bill

You need to have a contractor added as a vendor in Wave before you can pay them. Learn how in How to add contractors.

1. On the left-side menu, click Purchases > Bills.
2. Select Create a bill.

3. Fill in the bill’s details, which includes selecting the relevant Expense Category from the drop-down menu. If you don’t yet have a relevant expense account, you can create one by following these steps.

   If you’re unsure of which expense account to select, or how to set up your chart of accounts with the correct expense accounts, Wave recommends speaking with a bookkeeper. Wave Advisors offer bookkeeping services, which you can learn more about here.

   If you are paying a flat rate for contractor services, leave the Quantity as 1 and enter the dollar amount. If you pay contractors by the hour, enter the hours worked into Quantity.

4. Click Save.

Pay a contractor bill

You can pay a contractor bill outside of Wave. When you do so, you’ll need to manually mark the bill as paid.

If you want to use Wave to pay with direct deposit, you’ll need to set up direct deposit for payroll before paying contractors. When direct deposit is set up, you can take the following steps to add the bill to your next payroll:

1. On the left-side menu, click Purchases > Bills.
2. Locate the contractor bill.
3. Under Actions, click Pay Contractor.
4. Select Pay with direct deposit.

You can review and approve your next payroll under Payroll > Run Payroll. Learn more about paying on time by direct deposit in Paying your employees on time.

• Any bills that have already been added to your next payroll will be marked as pending.
• Bills included on a payroll that is currently being processed will be marked as scheduled.
• Paid bills, whether by check or direct deposit, will be marked as paid.

Contractors paid with direct deposit will be paid during your regular payroll schedule. Ensure you create your contractor bills and add them to the pay period before you approve your next payroll.

When you pay contractors by direct deposit, Wave takes care of the bookkeeping for you. Learn more in Automatic bookkeeping when paying contractors via direct deposit.

Canada

Because of their special tax status, contractors are considered vendors in Wave. This keeps your accounting accurate and your business compliant. When you pay an independent contractor, you log it as a purchase from a vendor by using bills.

Create a contractor bill

You need to have a contractor added as a vendor in Wave before you can pay them. Learn how in How to add contractors.

1. On the left-side menu, click Purchases > Bills.
2. Select Create a bill.

3. Fill in the bill’s details, which includes selecting the relevant Expense Category from the drop-down menu. If you don’t yet have a relevant expense account, you can create one by following these steps.

   If you’re unsure of which expense account to select, or how to set up your chart of accounts with the correct expense accounts, Wave recommends speaking with a bookkeeper. Wave Advisors offer bookkeeping services, which you can learn more about here.

   If you are paying a flat rate for contractor services, leave the Quantity as 1 and enter the dollar amount. If you pay contractors by the hour, enter the hours worked into Quantity.

4. Click Save.

If you are paying a flat rate for contractor service, leave the item quantity as 1 and enter the dollar amount. If you are paying by the hour, enter the number of hours in the quantity column, and the hourly rate in the amount column.

Pay a contractor bill

You can pay a contractor bill outside of Wave. When you do so, you’ll need to manually mark the bill as paid.

To pay a contractor by direct deposit:

1. On the left-side menu, head to Purchases > Bills.
2. Under Actions select Pay contractor.
3. Select Pay by direct deposit, which adds the bill to your next payroll.

• Any bills that have already been added to your next payroll will be marked as pending.
• Bills included on a payroll that is currently being processed will be marked as scheduled.
• Paid bills, whether by check or direct deposit, will be marked as paid.

Contractors will be paid by direct deposit on your regular payroll schedule. Make sure you add them to the payroll that runs when you want them to be paid. For example, if you run payroll for your regular employees bimonthly, but you’ve agreed to pay your contractor at the end of the month, make sure to add them to the second payroll for that month.

When you pay contractors by direct deposit, Wave takes care of the bookkeeping for you. Learn more in Automatic bookkeeping when paying contractors via direct deposit.