w2 or 1099

searcher profile

June 13, 2022

by a searcher from University of Portland in Centennial, CO, USA

When you first started and had only a few "employees" did you start them as w2 employees or 1099 contractors and why? I am going to be expanding fast but not wanting to get in the weeds more than needed, as ideally I want to keep things simple as possible. I do need to reduce liability as much as possible, as I own a dog care company.

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commentor profile
Reply by a professional
from Walsh College of Accountancy and Business Administration in Detroit, MI, USA
Use the IRS Guidelines (20 questions) to help you with this determination. California has stricter rules than this.

https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee

It is important to get this correct because payroll taxes carry with it large penalties and the IRS can pursue any individual personally who had the responsibility to withhold and remit payroll taxes.
commentor profile
Reply by a professional
from Georgia Institute of Technology in Atlanta, GA, United States
Now a days it is very hard to find employees and also retain them. If you hire your employees on W2 and offer benefits, you have a higher chance of retaining them. Also keep in mind, 1099 employees are responsible to pay their own taxes. If they fail to file and pay their own taxes IRS can ask you to pay them anyway. Hope this helps.
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