The Difference Between A W2 Employee And A 1099 Employee
There are some hard decisions that employers have to make when it comes to hiring 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.
When filing for taxes you need to make a distinction of whether your employees are W2 or 1099. A 1099 employee uses a 1099 form to file for their taxes. Such employees get paid based on the terms of the contract and are self-employed. A W2 employee get regular wages and benefits from their employer. Their employers have total control in the work they assigned to them. The check stub vary based on the employer.
A 1099 employee is fully independent and has contracts for specific jobs. They have the option of flexibility because they determine their time to work and use their skills set. They are the ones who set the amount they wish to charge. 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.
The advantage of hiring a 1099 employees is that they don’t get benefits. In comparison to W2 employees it costs less to hire them. 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. 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 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. They can work late for you when needed. You can control their job description and working schedules as the website suggests.
The disadvantage of W2 employees is that it is not easy to train and manage them. Motivating them is necessary for increased productivity. You also have to provide the workspace and the necessary tools. 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 means that you may get harsh penalties. You need to make a decision of whether to hire a W2 employee or a 1099 employee. Check the IRS requirements to learn about the taxes and avoid confusion.
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