Employers always choose what the best is for them in moving forward towards distinctive competency. For which the management should play a good role to keep up with the growing competition from other companies. In these circumstances the best manpower who are highly professional is preferred that opens up the great opportunities for w-2 employees with thick purse benefits who must be paid with a net paycheck throughout the year, meaning that tax withholdings are taken on a cheque-by-cheque basis. Employees have the ability to take advantage of sick days, vacation leaves, health and dental insurance, worker’s compensation leaves and pays, retirement, pension, and unemployment benefits but these are all given for a cost of good and efficient work sustainable to help the organization to further grow.
Differences Between W2 Form and 1099 Form
On the other hand, hiring independent contractors who are self-employed and with the rich expertise of valuable experience gained over the years as made them as good professionals or servicemen can impress employers who can depend on their jobs to be done in time through 1099 self-employed. When comparing them with putting w-2 employees by employers on a payroll, business owners can reap the benefits with 1099 self-employed as there is no income tax withholdings, no employment tax employees, no liability for acts of employees, no federal and state discrimination laws covering only employees and no obligation to offer benefits. 1099 self-employed will get paid in full for their services without any deductions but are liable for their taxes through IRS form 1099 when they receive the service fees of $600 or more in a calendar year.
However, while this may all sound too good to be true to employers, there are some practical disadvantages of hiring self-employed workers. For example, there is a basic understanding that independent contractors can choose whether or not they want to come to work without the fear of losing employment. They have the ability to control their own hours, and can typically get things done on their own terms without having to adhere to strict company policies – as long as the work performed has been completed and lives up to the standards that the employer has set out. But many self-employed workers are often tempted by the 1099 self-employed job option because they are told that they will get bigger money.
They are always enticed by the higher pay without obtaining a full understanding of what their employment status will mean long-term as to the needs of their business survival as self-employed. In the short run that’s absolutely true, however, eventually, independent contractors will actually owe higher taxes than employees. This is because not only will income tax be taken out, but self-employment tax as well. 1099 workers are also expected to pay twice as much for social security and medicare taxes. Independent Contractors as 1099 self-employed can never enjoy some of the benefits that employees have the ability to take advantage of as already mentioned in this blog for employees – nor are 1099 self-employed covered by an employer’s liability insurance and are not also eligible for overtime pay.
Please e-file your 1099 tax forms conveniently through Etax1099.com for this tax season in January 31, 2017.