All employers have to decide whether to hire payroll vs 1099 workers. Hiring either type of worker comes with its own pros and cons. For certain businesses, hiring 1099 workers will enable you to contract your work to people around the country. However, if you want to hire in-person employees, you should hire people who will end up on the standard payroll.
What’s the Difference Between Employees and Contractors?
Employers have hired more independent contractors since the start of the novel coronavirus pandemic. In a job market with an influx of remote employment, contractors come with greater flexibility than W-2 employees. However, employers should first identify the differences between the two types of workers.
1099 Worker – The big difference when you hire payroll vs 1099 workers is how much control you have over their work. You do not set the schedule for an independent contractor. You will also need to recognize that they will likely work for multiple clients at a time. If you want to hire someone for technical support, you may want to consider a contractor.
Payroll Employee – You can exert greater control over your employees’ assignments. You can also schedule when they work and know that they likely only work for you. If you are looking to hire a manager, you would add them to the company payroll as a W-2 employee.
Are Payroll or 1099 Workers Better?
Deciding who you should hire will be dependent on your specific business’s needs. For small businesses, there are both pros and cons to keep in mind as you hire payroll vs 1099 workers.
If you hire an independent contractor, you will save money in certain areas. Your company will save money on taxes and health insurance. You will also not have to invest in more employee retirement plans and social contributions. Instead, you can find a worker with specific expertise for the necessary project. However, employers should also keep quality in mind when hiring a 1099 worker. Without those incentives, a worker may not meet performance expectations.
When hiring W-2 employees, you may attract a broader pool of skilled individuals. These people value paid vacations and social stability. Ultimately, W-2 employees feeling secure will benefit a company overall. Their comfort can extend to them exhibiting greater loyalty. They may also be more inclined to take accountability for the quality of their work. However, the disadvantage is the cost. You will need to pay taxes and health insurance for these employees.
Why Use AMS Software
As you file your W-2 and 1099s each year, you will need a software system to support your business. Our W-2/1099 Forms Filer will support W-2, W-3 and most 1099 forms. Your company can enter information one time onto a screen that resembles an actual form. Then, you can save your data on our software every time you access a new form or record. The software feature guarantees that you will not lose your edited data for payroll vs 1099 workers.