1099 Employees Vs. W-2 Employees... What's the Difference?
Each is defined by a tax form, either 1099 for or a W-2 form. These forms are used to
document what a company has paid an employee or what the employee has earned.
When the IRS receives these forms, they are expecting a W-2 form from Full-time or
Part-time, hourly or salary employees. Differing from the W-2 form, the 1099 form is
used for independent contractors, reporting any stipends or payments they have
W-2 employees work for a company Part-time or Full-time. W-2 employees are also
able to receive company health care, 401(k), and other company benefits that are
offered. In addition, Taxes, Social Security, Disability, other federal & State taxes are
typically deducted from the W-2 employee’s pay.
1099 independent contractors usually do not receive company benefits and are paid on
a project, or by task structure (as compared to a W-2 employee, which is paid hourly or
salary). 1099 contractors do not work for the company, as they are either another
vendor or working solely for themselves.
It’s important to understand the Legalities & Processes behind 1099 & W-2 employees.
Contact us today if you have any questions!
1099 employees do not have income taxes held by the employer. In addition, they are
not able to receive any company benefits the company may offer. An employer only has
the right to “control or direct only the result of the work and not what will be done and
how it will be done.” (IRS.gov)
W-2 employees should be working Full time or Part-time, and are typically dedicated to
a single employer for an extended period of time. An employer has the right to restrict
employees from working with competitors. In addition, service or products created or
improved by an employee, belong solely to the company (not the W-2 employee)
Each hiring situation requires special care when identifying a W-2 employee vs a 1099
independent contractor. We’re happy to help!
1099 contractors & W-2 employees both have pros and cons. For example, onboarding
1099 employees & budgeting their stipend can be more predictable. The 1099
contractor typically will provide a flat rate, and isn't expecting promotions, or bonuses.
On the downside, unlike W-2 employees 1099 contractors typically don't have a set
schedule. Hiring a W-2 employee may be beneficial when the job requires a set
schedule. In addition to scheduling, the employer has more influence in how the job
gets done and has exclusive rights to anything produced from their employees while
This can all become very confusing when looking for your next hire. Our experienced
team at Hirics specializes in this very topic. Our streamlined, affordable & flexible hiring
process is a great fit for employers & employees alike. If you’re looking for your next
hire or a new career, Contact Hirics today
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