How to Switch From 1099 to W2 Employee

All business owners need to consider the type of workers they hire at some point. Sometimes it is even relevant to return to that question: Should I hire a contractor or an employee? There are significant differences in independent contractors versus full-time employees. You may now be wondering how to switch from 1099 to w2 employee. There are a number of ways to know when the timing is best.


The Company Wants More Control

Independent contractors possess more autonomy than employees. If you hire contractors, you are only in control of the final result. You cannot dictate to them how the project is completed in the actual process. If you want a more hands-on, collaborative approach, you should consider re-onboarding the worker as an employee.


Establishing a Longer Relationship

Independent contractors are known to come and go. If the company is happy with a contractor’s work, keeping them around is reasonable. Revisiting a conversation about longevity and how to switch from 1099 to w2 status is appropriate if both parties are interested.


Hiring a W2 Becomes More Cost Effective

Both types of workers can be cost beneficial. They can also become cost-prohibitive. Although a contractor has a set rate, they do also pay for their own benefits and the self-employment taxes. Additionally, a good contractor knows their value. They will not low-ball if they know they provide the best quality service. So, their fee may exceed that of a salaried employee. If you use them for multiple, longer projects, it may make sense to onboard them as an employee.



How Do You Make a Contractor an Employee?

You now know when it might be time to make a switch. The next step is learning how to switch from 1099 to w2 on paper.

The first responsibility is identifying the recipients of Form 1099. You will need to distribute W-2 forms to these individuals. The second step is informing the contractor of the change in status. Make sure to record the date and time when you revise these records. Then, after informing the IRS of the change, keep the receipt. The U.S. Postal Service will stamp the receipt. It will serve as “proof of mailing” for your legal records.

The next steps involve creating a new employee file in your company’s database. You should designate the converted employee as salary, salary exempt or hourly non-exempt. It will be based on their work and determined responsibilities. Next, determine the appropriate pay schedule based on the type of employee. Lastly, ensure they submit a Form W-4 and you should generate a Form W-2 for last year’s expenses.


Why Use Advanced Micro Solutions

When navigating how to switch from 1099 to w2 status, you need to stay organized. Our Software Generated Forms will let you print most forms directly from your printer. Another feature of our software is encryption. Users can email reports directly from the 1099 – W2 Software. These files are encrypted as PDFs and offer reliable security.


Software Solutions from AMS

Our W-2 and 1099 Forms Filer is our only required platform. From there, users pick the services they need. Choose from the tools below to build out your customized accounting software.