1099 vs. W-2: What's the Difference and Why It Matters for Your Business

Hiring help for your business is exciting—but it comes with important legal responsibilities. One major decision is whether your worker is an independent contractor (1099) or an employee (W-2).

Contractors work independently, set their own hours, and often use their own equipment. Employees, on the other hand, are under your direction and must comply with your work rules. Misclassifying employees as contractors can result in serious tax penalties, back wages, and liability for unpaid payroll taxes.

Understanding the distinction protects your business and ensures you build strong, compliant working relationships.