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cougar6620
January 22, 2022
Solved

Can you make an existing employee a contractor?

  • January 22, 2022
  • 2 replies
  • 0 views
Original commenter did not share additional details
Best answer by LieraMarie_A

Hi there, @cougar6620. I've got the steps on how to transition your employee to a contractor.

 

First, you'll have to change the employee's status to Terminated. Follow these steps:

  1. Click the Employees tab, and find the employee to be terminated.
  2. Click the employee's current status.
  3. Under Employment, select Terminated from the Status drop-down list.
  4. Optionally, click the date icon to select the employee's last day of Active status.
  5. Click Save.

 

Once done, you can proceed by adding a contractor. 

  1. Go to Employees/ Workers in the left navigation bar.
  2. Select Contractors.
  3. Click the Add a contractor button at the upper right side.
  4. Enter the Name and Email address.
  5. Make sure to check the box to email contractors, so they can complete their profile and get their own account to safely share their personal details.
  6. Click Add contractor.

 

 

Additionally, you might want to check out these articles to learn how to manage your contractors:

 

I'm just a reply away if you need any further assistance setting up contractors or employees. Have a good one.

2 replies

LieraMarie_A
LieraMarie_AAnswer
January 23, 2022

Hi there, @cougar6620. I've got the steps on how to transition your employee to a contractor.

 

First, you'll have to change the employee's status to Terminated. Follow these steps:

  1. Click the Employees tab, and find the employee to be terminated.
  2. Click the employee's current status.
  3. Under Employment, select Terminated from the Status drop-down list.
  4. Optionally, click the date icon to select the employee's last day of Active status.
  5. Click Save.

 

Once done, you can proceed by adding a contractor. 

  1. Go to Employees/ Workers in the left navigation bar.
  2. Select Contractors.
  3. Click the Add a contractor button at the upper right side.
  4. Enter the Name and Email address.
  5. Make sure to check the box to email contractors, so they can complete their profile and get their own account to safely share their personal details.
  6. Click Add contractor.

 

 

Additionally, you might want to check out these articles to learn how to manage your contractors:

 

I'm just a reply away if you need any further assistance setting up contractors or employees. Have a good one.

    C
    cougar6620Author
    January 23, 2022

    Thanks for the quick response!

     

    Rick

      G
      Godsson
      February 13, 2025

      What happens to the paycheck that was held back when switching an employee to subcontractor will they automatically receive there paycheck from when they first was hired as a W-2 employee 

      R
      RoseJillB
      February 13, 2025

      Hi there, @Godsson.

       

      Let me share insights about the paycheck withheld due to the employee's change to a subcontractor in QuickBooks Online (QBO).

       

      When an employee is switched to a subcontractor, any paycheck held back is not automatically issued. The final paycheck for a W-2 employee should be processed according to state laws and company policy as after transitioning, they will be paid as a contractor. 

       

      The employee will not automatically receive past wages; they must be paid for work performed as a subcontractor according to the terms of their new agreement. For specific details, please refer to your payroll policies or state regulations.

       

      Moreover, you can make their final paycheck as a W-2 employee with their last regular paycheck or an unscheduled payroll. Also, ensure to set up your contractor and track the payments you make to them.

       

      Feel free to add comments if you require additional help managing employees and contractors in QuickBooks, @Godsson. I'm just a few clicks away to help. Take care! 

      R
      rs0000
      April 10, 2025

      Following the instructions in this thread I have changed my employee to a contractor.  I voided all paychecks from 2024 and replaced them with expenditures paid via ACH in the name of the contractor.  I then marked them all "C" in the bank register and now have a list of payments correctly made to this contractor.  Now I need to process a 1099 for this person for 2024 payments, but they do not show up in the contractor list under 1099 filings.  How can I get a 1099 issued and filed for this contractor, formerly employee?

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