Majority of employers have found themselves in a dilemma when 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.
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. 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. Check stubs are not the same.
A 1099 employee is fully independent and has contracts for specific jobs. 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 the job they do their taxes can be withheld from their pay check.
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 disadvantages of a 1099 employee is that there may be times when you will have a clash of interest. As an employer you don't have the option of firing them because you have a contract. Since companies don't provide insurance cover or 1099 employees, in case of any injury they can 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 greatest advantage of hiring W2 employees is that they become loyal to the company since they want to keep their jobs. You have the advantage of counting on them during busy times. Employers have total control over their job descriptions and schedules, know and view here now!
The disadvantage of W2 employees is that it is not easy to train and manage them. You need to dedicate time to keep motivating them for more productivity. It is your duty as the employer to provide all the necessary tools and workspace. You also need to pay their wages, social security, sick leave, Medicare taxes and other benefits, you can also read more here!
Many employers get caught misclassifying employees as being independent workers as opposed to being full-time. This can cause 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.