How to Pay Subcontractors as a Gig Business Owner (2026)
If you pay a helper $2,000 or more in 2026 for gig-related work, you owe them a Form 1099-NEC by January 31, 2027 — collect a W-9 before the first payment. Personal apps like Venmo and Zelle work for small one-off payments but get messy fast once you have a regular helper; most gig business owners switch to a dedicated payment tool once they cross a few hundred dollars a month.
- 2026 threshold: 1099-NEC required once you pay someone $2,000+ for the year (up from $600)
- Collect Form W-9 before the first payment — not after
- You do not withhold taxes from a subcontractor — that is their responsibility
- Mixing business and personal apps makes year-end totals harder to reconstruct
- 1099-NEC deadline: January 31, 2027, to both the contractor and the IRS
When Do You Need to 1099 Someone You Pay?
If your gig business has grown to the point where you pay someone else — a driver who covers your route when you are sick, someone who helps with deliveries, a virtual assistant, or anyone doing work for your business who is not your employee — the IRS treats that the same way a client treats you: with a Form 1099-NEC.
For 2026, the reporting threshold is $2,000 in a calendar year, raised from the long-standing $600 figure. Cross that amount with a single non-employee, and you are required to issue them a 1099-NEC by January 31, 2027, and file a copy with the IRS.
Collect a W-9 Before You Pay Anyone
The single most common mistake gig business owners make is paying a helper all year, then scrambling for their Social Security number in January. Ask for a completed Form W-9 (name, address, Taxpayer ID or SSN) before the first payment goes out. It takes two minutes for them to fill out and saves you a stressful search later.
Venmo, Zelle, or a Dedicated Payment Tool?
For a one-time $50 favor, Venmo is fine. The problem shows up once you have a helper you pay regularly: personal payment apps were not built to separate business from personal transfers, and reconstructing "how much did I actually pay this person this year" from a Venmo feed in December is painful — especially if you also use the same app to split rent or pay friends back.
A dedicated business payment tool keeps a running, exportable record of exactly what you paid each helper, and lets them choose how they get paid — ACH, check, or wire — without you needing a separate process for each preference.
If you are paying more than one or two helpers regularly, a dedicated tool beats manual Venmo/Zelle tracking — it keeps a clean record for 1099-NEC time and lets each person choose ACH, check, or wire.
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Do You Withhold Taxes From a Subcontractor?
No. This is the same relationship you have with DoorDash, Uber, or whichever platform pays you — they do not withhold taxes from your payments, and you do not withhold from your subcontractor. Independent contractors are responsible for their own self-employment tax and quarterly estimated payments, exactly as described throughout this site for your own gig income.
Frequently Asked Questions
Do I need to send a 1099 to someone I pay to help with my gig work?
Yes, if you pay them $2,000 or more in a calendar year for services (the 2026 threshold, up from $600) and they are not your employee. Collect a Form W-9 from them before the first payment.
What is the 2026 threshold for issuing a 1099-NEC?
$2,000 per non-employee per year, up from the long-standing $600 figure. The form is due to the contractor and the IRS by January 31, 2027.
Can I just Venmo or Zelle my helper instead of tracking payments formally?
You can, but personal payment apps mix business and personal transactions and make it hard to total exact payments at year-end. Many gig business owners switch to a dedicated tool once they cross a few hundred dollars a month in helper payments.
What information do I need from a subcontractor before paying them?
A completed Form W-9 — name, address, and Taxpayer ID or Social Security number. Collect it before the first payment, not after.
Do I withhold taxes when I pay a subcontractor?
No. They are responsible for their own self-employment tax and quarterly payments, the same way you are responsible for yours.
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Estimates are based on current IRS guidance. This is not tax advice — consult a licensed professional for your situation.