1099 vs W2
1099 employees are considered independent contractors who are self-employed. A W2 employee is an employee who receives a regular wage along with benefits. A W2 employee has taxes already taken from their paychecks whereas a 1099 employee gets paid without taxes being taken out.
Advantages of 1099 Independent Contractors:
– Most independent contractors focus on one thing and bring specialized expertise.
– They have better flexibility because they can be used for short term projects or long term, where a regular employee would be with the business for a longer time.
– Since Independent contractors are not eligible for benefits, it lowers your company’s legal exposure.
– Lowers business costs because you aren’t providing things like overtime or benefits.
Advantages of W2 Employees:
– If you treat your employees right, they will feel more loyal to the company and do things to help and stay committed to the company.
– Having employees can help a business owner manage their time better by not having to worry about doing everything themselves.
– Employees only need to be trained once when they are hired about the company’s expectations whereas independent contractors aren’t a part of your in-office team, so they won’t be aware of company policies.
|W2 Employee||1099 Independent Contractor|
|Continuing relationship with employer||Does same work for multiple people|
|Is furnished with tools or materials necessary||Has own tools and equipment. Can hire, supervise, and pay assistants|
|Can quit at any time||Can make a profit or suffer a loss|
|Must comply with instructions on when, where, and how to work||Sets own schedule and hours|
|Is trained by employer||Has a business license|