Hiring
1099 vs W-2
1099 vs W-2 describes the difference between paying a worker as an independent contractor on a 1099 form and paying them as an employee on payroll with a W-2.
A W-2 worker is an employee. The business withholds taxes, often offers benefits and directs how the work is done. A 1099 worker is a contractor. The business pays the agreed fee, and the contractor handles their own taxes and sets their own methods.
The label depends on the real relationship, not on what the contract says. The IRS and the Department of Labor look at factors such as control and financial independence. A wrong label can cause back taxes and penalties. This page gives general information only, not tax or legal advice. Confirm your case with your CPA or attorney.
See independent contractor for the basics. Peachtree VA's assistants are 1099 contractors, and our bookkeepers can work alongside your CPA. Read about our bookkeeping services.
Related terms
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