Everything You Need To Know About A W2 Employee And A 1099 Employee
Most employers have a hard task when deciding to hire employees. For a long time, there has been confusion whether workers are independent contractors or employees. Hiring a 1099 employee or a W2 employee each comes with their advantages and disadvantages.
It is important when you decide to file for taxes that distinguish whether your employees are 1099 or w-2 in the forms. You will use a 1099 form to file for taxes if you are a 1099 employee. Such employees get paid based on the terms of the contract and are self-employed. W2 employees receive their wages and benefits from those who have employed them. Their employers determine the kind of work they do. Check stubs are not the same.
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 also charge an amount that they see fit. They do work for many businesses. However, depending on their pay check their taxes can be withheld.
Hiring a 1099 employee has an advantage of not paying benefits. In comparison to W2 employees it costs less to hire them. 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. You will also not be able to fire them anytime you want because the contract is binding. In addition, in case they get injured on your premises, they have the right to sue you.
A W2 employee is one who an employer takes time to train, offer the necessary tools for working, provides benefits and pays them regular salary. 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. They can work late for you when needed. 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. 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 could result in harsh penalties. It is important you know the difference. To avoid confusion, ensure you know the IRS requirements.