1099 Employees and / Subcontractor Vendor Setup
There are two types of vendors:
- "Subcontractors" or 3rd party staffing agencies - In the case of the 3rd party agency, your staffing company pays the agency and that agency is responsible for paying and preparing W2s for the employee.
- "1099 Employees" - In the case of the 1099 employee, your staffing company pays the employee but the employee is responsible for its own 1099.
In both cases, the client is not responsible for the taxes of the 1099 employee or employees of the 3rd party staffing company.
*Note* Within Enterprise, the difference between 1099 employees and staffing agencies is something called a "Pseudo AIdent." Staffing agencies have one; 1099 employees do not. Once a "Pseudo AIdent" is created, the only way to remove it from the vendor is to reach out to a Tempworks representative
Creating a Vendor
To create a vendor, go to 'all options' and select 'vendors':
This will bring you to vendor record in Enterprise. Select the '+' icon in the upper right-hand corner to create a new vendor:
This will open the 'Vendor Quick Add' wizard. Below are the required fields for setting up the employee/staffing company:
a. Fill in the 'Company ID' and the 'Full Company Name' with the name of the company. The 'Company ID' has a limit of 15 characters. For a 1099 employee, the employee's full name should be used for the 'Full Company Name':
b. In the Company Type List, choose "Vendor" for a 1099 employee; choose "Staffing" for a staffing company.
c. Pay Delay: Fill in "0."
i. This field is to delay paying the employee or staffing agency, until the customer has paid the invoice. This situation is rare because the employee needs to be paid.
d. Fill in the Corporate Address.
i. If the local address and remittance address are the same as the corporate address, you can select the 'copy' icon so the local and remittance addresses will fill in automatically.
ii. If they are not the same, fill in the local & remittance addresses manually.
Once all required fields are satisfied, select the 'Save' icon.
You will now be brought to the 'details' page for the newly created vendor/staffing company.
- For 1099 employees, on the right-hand side under 'government req,' two boxes will be checked: "Is Vendor" and "Generate 1099."
- For staffing agencies, on the right-hand side under 'government req', you can uncheck "Generate 1099" if the client does not want to file a 1099 for the staffing agency.
- *Subcontractor/staff agency only* Under Vendor/Subcontractor Setup on the left, in the field Pseudo AIdent, click the profile icon to create a Pseudo AIdent. Then, you can click it again to view the Pseudo Aident's record (remember Pseudo Aidents are only for the staffing agency).
- *For independent contractors (1099 employees) only* Do not create a Pseudo Aident.
WARNING: The new vendor will only show in drop-down lists after your login credentials have been refreshed, so either refresh your hierarchy or log out and back in again.
Linking a 1099 Employee to an Employee Record
Now that a vendor exists, the independent record still needs an employee record. This record will be assigned to orders just like a W2 employee but has visible markers on its employee record as well as its assignments that will help identify its status. Additionally, transactions for this record will experience payroll differently and will be processed through a 'SubPay' Payroll run.
To begin, create an employee record in the same way that you would for a W2 employee. Because the client is not responsible for taxes, the SSN and address are not important. (The SSN will fill in with all 0's.)
Under the 'details' page on the new employee, on the right-hand side, is a field for 'Vendor'. This field will link this employee to the employee record from before. Select the vendor that corresponds to this employee.
On the Avatar will appear an icon labelled "Subcontractor."
*Note* If you create an assignment for the 1099 employee without filling in the Vendor field on the employee record, you will create an assignment whose timecard will be for a W2 employee, and you cannot change it back. You will have to close the assignment, link the vendor and then create a new one from a record with the correct information.
*Note* When creating an assignment for an employee with a vendor, any assignments created for that employee will not have the W2 box checked under their assignment details record.
Linking a SubContractor/Staffing Agency to a Contact Record
For staffing agencies and/or a subcontractor, a contact record should be created to give them access to the vendor portal. For more information about the vendor portal or to see how a vendor contact interacts with it, check out: Vendor: Vendor Management Portal.
To begin, create a contact record. Under Contact Details, fill in the 'Vendor' field with the staffing agency. Select the 'Save' icon:
From the actions menu, select 'Manage Web User Account' to invite the contact to WebCenter. The only WebCenter role available is Vendor:
Two options exist for giving the contact credentials to WebCenter.
- Invitation via email
- Manual creation
In either case, a 'role' must be selected. As long as the contact record has a vendor selected you should be able to select a vendor WebCenter role. If customer contact roles are available, double check that the vendor was linked to the contact record.
*Note* The contact should not be linked to both a customer and a vendor; if they are, you will get an error.
Distributing Staffing Agencies to Customers and Orders
For staffing agencies/subcontractors, you can link them either to the customer for whom they will be providing employees or, more specifically, to the order that they will be filling.
To link them to a customer, go to the customer 'details' section and navigate to the 'vendor management' page. Add the staffing agency with the '+' icon.
This will open the 'add vendor to company' wizard:
- Choosing a 'Job Title' will limit the orders that the vendor is automatically applied to.
- The' Order Delay (Hours)' specifies the amount of time the client has to fill the order before the vendor has access to it.
- 'Max Candidates per Req' will determine how many candidates the contact can select per order.
When you create orders for the customer, the status of the vendor will update from "Waiting for distribution" to "Distributed" after the allotted delay.
If the delay is 0 hours, then you must manually update the status to "Distributed." To edit the vendor on the order, select the 'edit' icon.
When editing a vendor on the order, the following fields can be set:
- The Max Candidates Per Req determines exactly how many employees can be provided by the vendor on the order. If you specify it on the customer, the vendor will only ever be able to provide this many employees, even if you change the amount on the order. Therefore, put 0 to allow yourself freedom later.
- If you only want to link the vendor to specific orders, then you can add the staffing agency under Order Details --> Vendors.
- When the vendor contact sees the order in WebCenter, he will have the ability to Accept or Reject w/Reason. The service rep will be alerted of the decision by email, and the vendor's status on the order will be updated. The vendor can create employees under the Employee tab and can then return to the order to add the employee to the order. Their creation/addition is all reflected in Enterprise.
Processing payroll for 1099 employees and subcontractors will be processed by special payroll runs. They are:
- SubPay- This payroll run is used for transactions for 1099 employees. Employees will receive a check without any taxes taken out.
- SubPush- This is a payroll run used to take transactions from employees that are setup as belonging to the third party staffing agency or subcontractor and push them out to the Pseudo AIdent created for the staffing agency. Think of them as pretend checks that will be processed and pushed into subpaycon.
- Subpaycons- This is a payroll run used after all subpush payroll runs are complete and after the invoicing for the client is complete to create a consolidated check for the subcontractor. It should be made up of all transactions that were pushed with subpush for that staffing company. The checkstub can be viewed on the subcontractor/staffing agencies pseudo AIdent.
When it comes time to process payroll:
For a 1099 employee, process them through a 'SubPay' payroll run type. This payroll run functions similarly to a normal 'checkrun' payroll run with the exception that it will only pull employees that have non W2- transactions.
For a staffing agency, you will ultimately process the check through a SubPayCons payroll run type. First, however, you need to run the employees' checks ("pretend" checks, because you're not actually paying the employee) through a payroll run type of SubPush.
This check will be a net zero check.
Doing so creates a record of the check in our backend tables, and the check is logged in the employee's check history.
*Note* These transactions must be fully posted before you can run them through a SubPayCons payroll run, which means that not only must they have payroll and invoice complete, but any other transactions for those employees (e.g., for other customers) must also be payroll and invoice complete because all proofed transactions for an employee must be posted together.
Once the 'SubPush' transactions have been posted, the 'SubPushCons' payroll run can be executed.
Pushed checks will be visible once the run has began and any checks that have not yet been cut for the subcontractor will appear on the single check.
The check can be viewed and then printed: