The Best Accounting Software for Contractors and 1099 Workers in 2026

For under 20 contractors, QuickBooks Online Simple Start includes 20 contractor seats and $4.99 per 1099 e-file at year-end. For 5+ contractors with a need for project profitability, Xero Growing plus Gusto Contractor-Only ($35 base plus $6/contractor) is cleaner and more scalable. For agencies where contractors are the product, FreshBooks Plus or Premium has the best native project profitability and time tracking.

You must file a 1099-NEC for any contractor you paid $600 or more in a calendar year for services rendered. The deadline is January 31 for both sending the form to the contractor and filing with the IRS. Payments to incorporated businesses (S-Corps, C-Corps) are generally exempt, but payments to sole proprietors and single-member LLCs disregarded as sole proprietors are not.

Project profitability tracks revenue billed to a client against all costs associated with that project, including contractor time and expenses. FreshBooks has the best native implementation - you assign expenses and time to a project and see profit per project in real time. Xero Established has project tracking. QBO uses class tracking, which is more complex to set up but powerful. Wave has no project profitability feature.

January 31, 2026 for the 2025 tax year. This deadline applies to both distributing 1099-NEC forms to contractors and filing with the IRS. E-filing via your accounting software or a service like Track1099 or Tax1099 is faster and creates an audit trail. Paper filing has the same deadline but is not recommended for more than 5 contractors.