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The Difference Between A 1099 Employee And W2 Employee

Majority of employers have found themselves in a dilemma when hiring employees. There has been argument as to whether workers are employees or independent contractors. Whether you decide to hire a 1099 employee or a W2 employee there are advantages disadvantages of both options.

It is important when you decide to file for taxes that distinguish whether your employees are 1099 or w-2 in the forms. 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. A W2 employee get regular wages and benefits from their employer. Their employers determine the kind of work they do. Check stubs are not the same.

A 1099 employee is fully independent and has contracts for specific jobs. They get to do their job when they want and they rely on their skills. They also charge an amount that they see fit. They have the option of working for different companies. However, depending on the job they do their taxes can be withheld from their pay check.
Hiring a 1099 employee has an advantage of not paying benefits. It is also cost-effective to pay them compared to W2 employees. You have flexibility because you hire them only when in need. They have a lot of training.

The con of hiring an independent contractor is that at times your interests may differ. As an employer you don’t have the option of firing them because you have a 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. Employers can withhold taxes from W2 employees and allocate the type of work they are supposed to do.

The advantages of having W2 employees if that they are loyal to the company because they want to have their jobs for a long time. You have the advantage of counting on them during busy times. 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 will have to keep motivating them for top performance. As an employer, you will be required to offer them the needed tools as well as the workspace. As an employer it is your duty to pay their wages, sick leave, Medicare taxes, sick leave as well as other benefits as the page suggests.

Most employers misclassify W2 and 199 employees. This can cause harsh penalties. You need to make a decision of whether to hire a W2 employee or a 1099 employee. Familiarize yourself with the IRS requirements to know more about taxes.

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