Everything You Need To Know About A W2 Employee And A 1099 Employee
Majority of employers have found themselves in a dilemma when hiring employees. There has been an ongoing debate for a long time as to whether workers are employees or independent contractors. 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. 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. As for W2 employees, they get benefits and wages from their employer. Their employers determine the kind of work they do. The check stub differ depending on the employer.
A 1099 employee relies on contracts which makes them fully independent. A 1099 employee is independent and works on different contracts. They have the option of flexibility because they determine their time to work and use their skills set. They also charge an amount that they see fit. They have the option of working for different companies. This means that their taxes can be withheld from their pay checks.
Hiring a 1099 employee has an advantage of not paying benefits. You spend a less amount hiring them compared to W2 employees. They provide the flexibility because they are hired when necessary. They have a lot of training.
The cons of hiring a 1099 in may have a clash of interest. 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 is trained by their employer, get benefits and a regular salary. Employers can withhold taxes from W2 employees and allocate the type of work they are supposed to do.
The greatest advantage of hiring W2 employees is that they become loyal to the company since they want to keep their jobs. They can work late for you when needed. You have total control of their schedules.
The disadvantage of W2 employees is that it is not easy to train and manage them. Motivating them is necessary for increased 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. 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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