as an employer is better to w2 or 1099 my employees?

Question

please be specifiic

Answer 1

For an employer, it will be tax-saving for you to issue your employees 1099s. By issuing 1099s, you treat your employees as indepent contractors and you DO NOT PAY the employer's portion of FICA tax, which is 7.65% of the payroll.

On the other hand, your employees will be responsible for 15.3% of FICA tax instead of 7.65% if they receive 1099s rather than W2s.

Answer 2

You do NOT get a choice! If they are employees you MUST withhold taxes and give them a Form W-2 at the end of the year.

If you determine how the people will do the job, provide the tools and facilities for them to do the job, set the work hours and days, etc. then they are employees.

If you retain someone to do a specific task but do not control when or how they do the task then they may be independent contractors. A good example would be a carpenter to do some remodeling or having someone install new carpeting or install a bathroom.

Answer 3

Technically, there is no such thing as a 1099 "employee". People who receive 1099s are, by definition, independent contractors. You can not just decide to switch back and forth.

Many business try to fraudulently categorize their people as independent contractors. The rule of thumb is that if you set their hours, you oversee their work and they use your supplies and/or tools, they are W2 employees. Period. If your people come and go as they please and provide their own tools and/or supplies, they are probably 1099 independent contractors.

Miscategorizing people as 1099 IC's is a very good way to drawn the ire of the IRS as well as your state's department of revenue and unemployment commission.

Answer 4

Independent contractors should be paid more than employees doing similar (emphasis on similar, not identical) work because they have to cover the expenses that an employer would cover. If you make a dubious try to classify people who should be employees as independent contractors, you can find yourself liable for federal and state employment taxes plus penalties and hefty medical bills if one of your "non-employees" is hurt on the job and should have been covered by workers compensation. If you fire any of them and they file an unemployment insurance claim--and if you have been playing games with employee classification, you can count on it--the state will be down on you in a hurry. If you have anything resembling doubts about what you should do, get professional advice in writing.

Answer 5

You don't get to just make the choice - it depends on what they're doing for you. If they are your employees, then they get a W-2, not a 1099.

If you control their working hours and conditions, then they're employees. If you hire someone to do a project, and don't set the rules on how, when or where they do the work except a final deadline and an outline of what you want, then they'd more likely get a 1099.

See http://www.irs.gov/faqs/faq-kw54.html

Answer 6

Driving to and from the office would not be deductible anyway. That's called commuting miles, not business miles. Business miles are miles driven as part of your job, during your workday. Tell them you want to be paid on a W-2. That's the legal way. They cannot legally let you choose. And you DO have some benefits with a W-2 - workers comp if you get hurt on the job, or unemployment if you're laid off. A contractor doesn't have those.

Answer 7

W-2 are for your employees you should be taking taxes out for them. 1099 forms are for employess that are independent contractors, they are responsible for reporting income and taxes to the irs.. You don't want to make that mistake.

Answer 8

Any full time employee of yours must be W-2ed and have taxes taken out. If you have contractual workers they may be 1099ed.

Answer 9

you MUST w2 unless they are just free-lancers.