Optimizing for 1099 vs. W2

by a searcher from Stanford University - Graduate School of Business

2 years ago

I am doing a non-SBA deal for a company with a small team and the owner will stay on part time. I'm trying to decide how to optimize between having her as a a W2 vs. a 1099 employee. I know this is mainly dictated by the work relationship (how many hours, is she 'controlled' by the company or free to do contract work elsewhere, etc.), but she's very much on the edge for all criteria, so now I want to optimize for what is best for the business - I'm mainly thinking costs but need to consider any qualitative factors such as non-competes.

Can anyone point me to resources I can dig into to determine the cost comparison? Is there someone I should reach out to to discuss this (for example, an HR specialist or an attorney or CPA)? Any guidance would be great!

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searcher from Stanford University - Graduate School of Business

Mark, Leo, and Bao - that you all very much for your responses! This gives me a good idea of what questions to ask!

2 years ago | like reply | 0 likes

searcher from Columbia University - Columbia Business School

Thomas, the non compete issue is not affected by 1099 or W2. It is an agreement between the company and the person (employee or consultant). However, in certain states, non competes have to be narrowly tailored or it won't be enforceable so check w your state attorney for the boundaries of the non-compete terms. Over alll 1099 is better for the company, but if she meets the IRS definition of an employee, you may not have a choice

2 years ago | like reply | 1 like

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