What’s the difference between being a contract worker or a full-time salaried employee? Is one better than the other? What’s the real difference between a W2 and a 1099 form? Are there clear benefits to either? As you might suspect, the answer is that it depends on you and your needs as an employee. Today’s blog will review some of the differences between living the W2 and the 1099 lifestyle. But only you will know what’s right for you.
All kidding aside, the real difference between 1099s and W2s are that they are the two separate tax forms for two different types of worker tracked by the IRS. If you’re an independent contractor, you get a 1099 form. If you’re an employee, you receive a W2. As a W2 employee, payroll taxes are automatically deducted from your paycheck and then paid to the government through your employer.
As a full-time employee, you likely will have limited control over your schedule and your work, but you would likely have more stability and employer-sponsored benefits, such as health care and sick leave. You will have assigned hours or a set schedule. Your employer will likely provide training, and any tools and materials necessary to finish your work. But they will also expect you to complete any and all work assigned to you by a manager.
In comparison, as an independent contractor, you would be filing a 1099 form instead of a W2 come tax season. You would also be required to calculate your own payroll taxes and submit the sum to the government on a quarterly basis. Independent contractors can often set their own schedules. They can use their own personal method for finishing assignments. So long as the work gets done, the client is happy. Contractors often have more than one client, especially if assignments are not full-time commitments. Contractors can also accept tasks on a case-by-case basis, and can turn down offers as well. That said, they have to supply their own tools and rarely benefit from employer-sponsored benefits such as health care, and so on.
Contractors who work in partnership with a staffing agency are often the beneficiaries of the best of both worlds. Many staffing agencies act as a kind of employer, but still offer more flexibility in terms of the work and the schedules. They are also very helpful in finding and placing workers in roles when they are between jobs. They build their business on placing workers in roles with clients who are also looking for something a little more flexible than hiring a full-time employee, whether due to changes in workload throughout the year, a steep increase in project work, or simply to meet seasonal demands.
If you are between jobs yourself, take the time to talk to a recruiter about the benefits of contract work. We can help you find what you are looking for quickly and easily!