w2 or 1099

by a searcher from University of Portland

1 year ago

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.

1 like
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11 comments

searcher from Stanford University - Graduate School of Business

I just went through this and was on the fence because the original founder of the business I acquired is staying on working part time - a very edge case based on all of the guidelines. I decided to go with W2 even though it is more expensive for the company because it is more official, better (likely) retention, less risk (from IRS audit), and better for the long term (as I grow I want to make the business more official and process oriented. This will be easier to add W2s later on since the process is already set up).

1 year ago | like reply | 0 likes

professional from Franciscan University of Steubenville

I agree with the comments above that you should definitely seek out HR and legal support to justify the case for 1099's/W2's. I would also look for companies that provide outsourced services for the area you need to hire in. These are very useful as you scale as they give you the flexibility to cancel the arrangement if it is not working out. Harder to do when you bring on a W2. You can hold these vendors accountable for the desired results. If you end up needing to hire a full time W2 in that area, you have a service provider that can also get them up to speed as part of the transition.

1 year ago | like reply | 0 likes

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