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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.” (

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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