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The Difference Between A 1099 Employee And W2 Employee

There are some hard decisions that employers have to make when it comes to hiring employees. There has been an ongoing debate for a long time as to whether workers are employees or independent contractors. Hiring a 1099 employee or a W2 employee each comes with their advantages and disadvantages.

When filing for taxes you need to make a distinction of whether your employees are W2 or 1099. A 1099 employee uses a 1099 form to file for their taxes. This is because they are self-employed and get payment based on the terms of contract. W2 employees receive their wages and benefits from those who have employed them. Their employers have control when it comes to work. The check stub vary based on the employer.

A 1099 employee relies on contracts which makes them fully independent. A 1099 employee is independent and works on different contracts. They use their skills and can work at their own time. They are the ones who set the amount they wish to charge. They do work for many businesses. This means that their taxes can be withheld from their pay checks.

Hiring a 1099 employee has an advantage of not paying benefits. You spend a less amount hiring them compared to W2 employees. The greatest advantage is that you hire them only when necessary. They are also trained in their field.

The cons of hiring a 1099 in may have a clash of interest. The contracts are also binding which means as an employer you cannot fire them since you will have breached the contract. In addition, in case they get injured on your premises, they have the right to sue you.

A W2 employee on the other hand, get regular salary and benefits from an employer. As an employer you have the right to withhold taxes and set rules and regulations for work.

The benefit of W2 employees is that they are committed to their work. You can count on them on busy time by having them work late when necessary. You can control their job description and working schedules as the website suggests.

The con is that training and managing the W2 employees is not an easy task. You need to dedicate time to keep motivating them for more productivity. It is your duty as the employer to provide all the necessary tools and workspace. It is your responsibility to pay for their Medicare taxes, sick leave, social security, wages and other benefits, check it out now!

Majority of employers make the mistake of misclassifying their employees as independent contractors. This can cause harsh penalties. It is important you know the difference. Familiarize yourself with the IRS requirements to know more about taxes, visit and click here to get started!

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