Overview
When paying someone through Plane, you may need to decide whether to add them as a contractor or a vendor.
A simple way to decide is:
If you are paying an individual person → add them as a contractor
If you are paying a business or company → add them as a vendor
Plane also provides different features depending on whether someone is added as a contractor or vendor.
Key Differences between Contractors and Vendors
Contractors
Contractors are typically individual workers who are part of your extended team.
Adding a contractor requires more detailed information, such as:
Legal name
Date of birth
Residential address
Contractors also have access to additional features designed for team members, including:
HRIS tracking (compensation history, reporting/manager history)
Contracts
Payroll
Benefits
Expense reports
Vendors
Vendors are typically businesses or service providers that your company pays for services.
Vendors have a more streamlined setup and fewer HR-related features.
For vendors:
Only basic payment information is required.
Vendors are paid through one-time payments.
Vendors cannot be added to payroll.
Contracts are not supported within Plane.
Vendors can submit payment requests, but not expense reports.
What if a contractor has a business?
In some cases, contractors may operate through a business.
Contractors can optionally provide a business name and address, which is commonly used when the business is a sole proprietorship, though it is not limited to this structure.
If you use a Plane-generated contract, the agreement will be between your organization and the contractor’s business, with the contractor signing on behalf of the business.
If no business information is provided, the contract will be between your organization and the individual contractor.
Tax forms (W-8BEN, W-9, and 1099-NEC)
Both contractors and vendors must complete the appropriate tax forms.
Depending on their tax status, they may need to submit:
Form W-9 (for U.S. persons)
Form W-8BEN or W-8BEN-E (for non-U.S. persons or entities)
The choice between adding someone as a contractor or vendor does not affect how they complete these forms.
Form 1099-NEC
Plane will generate Form 1099-NEC for eligible U.S. contractors or vendors.
Forms are generated around mid-January for the previous tax year.
The latest W-9 on file is used to populate the form.
1099-NEC forms are required for U.S. persons paid more than $600 during the tax year, unless they have elected to be taxed as a corporation.
Questions?
We’re here to help! You can find more of our guides here, reach out to us at support@plane.com, or use Plane's in-app chat.