more-arw search

Q&A Forum

ACH vs. PayPal to pay Independent Contractors

We are planning a project that will require a number of independent contractors. We had been planning to pay these IC's by ACH. However, several of the IC's have requested that we use PayPal instead. I know that the IRS recently made some changes to the rules governing 1099 reporting if you paid the IC's via PayPal. However, I've not been able to determine what the new rules are and if it is better to pay via PayPal vs. ACH. Can anyone shed light on this matter?

Answers

Topic Expert
Joan Varrone
Title: CFO
Company: Cloud Cruiser
LinkedIn Profile
(CFO, Cloud Cruiser) |

You should be providing 1099 to all of these contractors regardless of the way you pay them so the new IRS rules dont affect you. I dont think Paypal charges you anything to use this to make payments so you should honor their requests.

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

Regardless of how you pay them, the US DOL Wage and Hour Department is cracking down on 1099 usage.

Read this pamphlet and make sure they are 1099 people.

Fact Sheet #13: Employment Relationship Under the Fair Labor Standards Act (FLSA)
http://www.dol.gov/whd/regs/compliance/whdfs13.pdf

Len Green
Title: Performance Improvement Consultant and E..
Company: Haygarth Consulting LLC
LinkedIn Profile
(Performance Improvement Consultant and ERP Strategist, Haygarth Consulting LLC) |

Before you set up both ACH and PayPal, ask why those subs want PayPal and why they dislike ACH. Also consider the costs and effort to track who gets paid how.

5300 views

Get Free Membership

By signing up, you will receive emails from Proformative regarding Proformative programs, events, community news and activity. You can withdraw your consent at any time. Contact Us.

Business Exchange

Browse the Business Exchange to find information, resources and peer reviews to help you select the right solution for your business.

Learn more

Contribute to Community

If you’re interested in learning more about contributing to your Proformative community, we have many ways for you to get involved. Please email content@proformative.com to learn more about becoming a speaker or contributing to the blogs/Q&A Forum.