Establishing a relationship between your business and a corporation is the basis for what is a C2C contract agreement. Small businesses entering into a corp-to-corp arrangement often want to recruit people without worrying about hiring longevity. Focusing on employee retention or a long-lasting relationship is not the purpose of establishing these contracts. It is primarily what sets C2C contractor arrangements apart from W-2 employees or 1099 independent contractors.
Do thorough research before you enter into one of these arrangements with a business. A C2C contract may be in your company’s best interest. Look first for reliable software to assist you. Advanced Micro Solutions offers a customizable suite of accounting tools for small businesses. Handling different types of worker agreements and classifications is not unusual for businesses. Make sure to not create more work for yourself in your daily tasks or with any software.
Main Differences Between W-2 vs C2C
Learning the ins and outs of what is a C2C contract streamlines any business’s tax season. It is important that you know how a corp-to-corp contract differs from a W-2 or 1099 arrangement.
C2C consultants do not work full time. Small businesses who have already fully onboarded a team may hire S-corp contractors for some projects. You do not need to provide the contractors with traditional benefits like you do for a W-2 employee.
C2C consultants cannot work for more than one company. W-2 employees and typical 1099 independent contractors can have several side gigs. Hiring a C2C contractor means that you can rely on their services without any outside conflicts.
Vetted corporations provide reliable consultants. Understanding what is a C2C contract and how it differs from a W-2 contract is one step. The other step is knowing how it is similar and dissimilar to traditional independent contractors. One major difference is corp-to-corp contracts reduce the risk of misclassifications. Many vetted corporations will offer more security than one individual.
Consultants manage their own taxes. C2C contractors, unlike W-2 employees, have a greater responsibility for managing their taxes. The taxes are also at a higher rate since the corporation must pay into Social Security and payroll employment taxes.
Use AMS Software for C2C Contracts
Each type of worker classification has its own unique advantages. A C2C arrangement trims employment taxes and reduces concerns of small business retention. Another benefit is that the IRS is less likely to audit C2C employers for misclassifications. Businesses of all sizes should still prepare accordingly when they hire new workers. Finding a reliable accounting and payroll program is one way to prepare.
AMS Payroll makes paying employees, individual contractors, and corporations straightforward. The software supports up to 1,999 payers and up to 9,999 employees per payer. Our software processes direct deposits and supports over 30 different check types. Finding affordable and comprehensive software is simple once you determine what is a C2C contract and its role in your business dealings. Test our tools with our free software demo or call our customer support at (405) 340-0697 with any questions.