1099 Contractor and a W2 Employee

What is the Difference Between a 1099 Contractor and a W2 Employee?

When we think of freelance work, we often picture a blogger sitting at their computer, cranking out content in their pajamas.

While this is a very realistic role for many independent contractors, not every contractor works on the internet. Hairdressers, builders, and even engineers can also work as independent contractors!

As freelance work is growing each day, many of us are still unsure of exactly how a 1099 contractor and a W2 employee differ. There are many pros and cons to each position.

Keep reading to learn about how these workers differ!

How Do a W2 Employee and a 1099 Contractor Differ?

A 1099 and a W2 are two different tax forms that an employee must fill out come tax season.

The role of a worker in the company will determine the type of tax form they must fill out.

So, what’s the difference between these two employees?

W2 Employee

A W2 employee is one that is a regular employee working directly for the company.

As a result, the W2 employee should be receiving full benefits offered by the company, if the employee works full time. Since the employee is working solely for one company, that company is responsible for delivering checks in which income taxes are withheld.

Additionally, a W2 employee has less control in the working environment, as they’re working under the company.

1099 Contractor

A 1099 contractor is a self-employed individual.

This worker is not considered a regular employee with the company. They usually do freelance work for the company when it’s needed. A 1099 contractor is not required to get benefits from the company they’re doing freelance work for.

For example, medical, dental, and a 401(k) do not need to be provided to an independent contractor.

Additionally, the contractor typically has more control over what is being asked of them. When a contractor works with a business or another individual, this relationship is considered more of a partnership.

How Do These Differ?

A 1099 contractor and a W2 employee differ in many ways.

For starters, one is offered benefits through a company while another is not. A W2 employee typically has a set schedule, a salary, and a certain amount of sick/vacation time. At the same time, the employee must comply with a handbook and follow their boss’ orders.

On the other hand, a 1099 contractor does not have the stability that benefits provide. While the contractor may not receive paid vacation, this worker does make their own schedule. They have the ability to pick and choose the projects and clients they’d like to work with.

If you’re an employer, how you pay these employees will differ. Use a pay stub generator to make your payroll process smoother!

Which Type of Employee Are You?

Now that you understand the difference between a 1099 worker and a W2 employee, you can pay them accordingly.
For many companies, both independent contractors and full-time employees are assets. Each company and industry requires a variety of jobs to be done. Both workers contribute positively to the mission.

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