1099s vs. W2 Employees. What’s the difference?

1099s vs. W2 Employees. What’s the difference?

by | Dec 30, 2021 | Entrepreneurship

If you have landed here, you are probably considering reducing the number of full-time employees (W2) and hiring self-employed independent contractors (1099) to perform specific jobs. There are significant differences in how these two types of workers are classified with the Internal Revenue Service (IRS). Knowing these differences is crucial if you want to avoid hefty fines, tax penalties, and even a lawsuit against your North Carolina business.

Related Blog: 8 Common Business Tax Deductions

Who is a W2 employee?

 

W-2 employee formA W2 employee is someone who you recruit and add to your payroll — your typical, salaried employee. The litmus test used by the IRS to determine whether someone is a W2 employee is when the business controls what work is done and how it is done. The company manages the specific details of how the job is done even if the employee enjoys considerable autonomy in doing their job.

According to IRS regulations for W2 employees, you must withhold income taxes from the employee’s paycheck and provide them with a minimum wage and other benefits such as health insurance, overtime pay, unemployment insurance, and workers’ compensation insurance. You must also provide W2 statements to employees at the end of each year and report their earnings to the IRS.

 

 

Who is a 1099 employee?

1099 Contracted Services Form

1099 contractors are independent contractors hired to perform specific tasks outlined in a written agreement. While businesses can control or direct the results of their work, they have no control over what is done to deliver the results or how the job is done.

You are not required to withhold taxes from the contractor’s check or pay payroll taxes in most cases, though you must provide them with a Form 1099-MISC, which they will use to report their earnings. According to 1099 employment rules, an independent contractor is not entitled to minimum wage, health insurance, paid time off, and overtime. They are not also covered by workers’ compensation or unemployment benefits.

 

 

Understanding the Difference

With a W2 employee, you make all the decisions. You decide how they work, when they work, what they can (and cannot) do, what level of performance is acceptable, and how much they will be paid. A W2 employee may work in your office, using a desk and computer provided by you, and be assigned to a fixed shift. They work for your business on an ongoing basis, and you have complete control over how they carry out their responsibilities.

1099 workers, on the other hand, make their own decisions. They have complete control over how the work is done and how much they are paid. They are responsible for outcomes rather than processes. A plumber or electrician you hire to deal with an issue at your business is an example of a 1099 worker. You tell them what you want done but rely on their experience and expertise to get the work done right.

As an employer, you bear the responsibility of deciding how to classify workers. Unless they meet the stringent standards for being an independent contractor, they are presumed to be employees under the law.

Reasons to hire W2 employees

  • W2 employees get the job done in the manner that you specify.
  • W2 employees are more consistent in their job and more loyal to your business. Because 1099 workers are free to work with other clients, you are not their exclusive priority.
  • You can reassign W2 employees to other roles and responsibilities as needed by your business. 1099 workers are hired to perform specific tasks.

Reasons to hire 1099 workers

  • You can engage 1099 workers on a project-by-project basis. This allows you to be more flexible as your business priorities change.
  • 1099 workers may be able to bring specialized expertise to the table that your employees do not have. If you have a project that requires particular design or technical skills, you will almost certainly be able to find an independent contractor for the job.
  • When you engage 1099 workers, you may be able to reduce your business expenses because you will not be required to provide benefits or overtime.
  • There is also less paperwork involved because you are not required to withhold taxes.

Common-Law Rules

The IRS will consider the degree of control and independence in the following categories when deciding whether someone is a W2 employee or 1099 employee:

  • Behavioral: Are you in charge of or have any authority over what the employee does and how they perform their responsibilities?
  • Financial: Are you in charge of the financial parts of the employee’s job? This could include how they are compensated, whether job-related expenses are covered, and who provides the necessary tools to get the job done.
  • Relationship: Is the work done a “critical part” of your business? Is this a long-term relationship? Are there any formal contracts or benefits associated with being an employee, such as health insurance, retirement contributions, and flexible spending accounts?

The level of control a business has over its workers is what the employee classification process ultimately comes down to. If you control the majority of a worker’s job, they are most certainly a W2 employee. If they have a high level of autonomy, they are probably a 1099 worker.

If you are still unsure whether someone is a W2 employee or a 1099 worker, you can seek clarification from the IRS. There is a form for it (Form SS-8), but it can take up to six months to get a determination.

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In addition to giving you insight into being a successful entrepreneur, Print and Web Designer can help you boost your inbound marketing efforts. We can also handle other aspects of your brand design needs, including brochure design, print design, magazine design, and web design. So, stop searching for “Triangle web design services,” “Durham web design services,” or “Cary web design services,” and give us a call at (336) 684-6505 or write to us at info@PrintandWebDesigner.com today.

 

 

A Networking Group that Works for You

A Networking Group that Works for You

by | Nov 30, 2021 | Entrepreneurship

Networking people sitting around a table and drinking coffeeWhen it comes to expanding your business in the Research Triangle area, networking is key. While your inbound marketing efforts are commendable, you should not discount the value of networking.

Also Read: Common Mistakes made by entrepreneurs – Your Style

It’s simple — the wider your network, the more likely you are to know someone who can support your business growth.

Thanks to the Internet, you now have innumerable excellent opportunities to network with others. Here are six ways for finding networking groups:

1. Look at online networking sites

Nowadays, there is a website for just about everything — and networking is no exception. Here are two websites that can assist you in finding or organizing networking events:

  • Meetup: Discover [mostly] free meet-ups from every industry. For regular group meetings, there is also a category for “career and business events.”
  • Eventbrite: This is the place to look for seminars, conventions, and exhibitions. There is a lot to explore.

2. Turn to social media

Social networking is important in both our personal and professional lives. So it logically follows that you should search through your social media profiles for networking opportunities.

Yes — social media can not only shape your brand design, but it can also be a fantastic networking tool.

If you are a member of social media platforms like Facebook and LinkedIn, you can look for industry events in your area. You can also look at the profiles of those who will attend and stay connected with them after the event.

Also Read: How To Keep Your Brand Consistent Across Social Media

3. Reach out to local organizations

Make the most of your community resources. Check with your local chamber of commerce and business groups for open workshops and meetings.

Although membership fees may run a little higher, local organizations can help you network with other business people in your area.

4. Support a good cause

If you are willing to volunteer your time, look for a non-profit organization that needs your help and support. Charity or fundraising events will allow you to socialize with others who share similar interests.

5. Why not host an event of your own?

Invite business people in your area or industry into your business or allow other local organizations to use your space for a networking event.

6. Follow up

If you have attended a networking event or hosted one, follow up with those you spoke to. These people may even be able to provide you with information about an upcoming networking event.

Find the Best Networking Opportunity

It is crucial that you only participate in networking events that are a good fit for you. After all, there is nothing worse than wasting your resources by joining a networking group that will probably not help you reach your long-term business objectives.
Spend some time researching different networking groups to ensure you pick the best one(s) to invest your time, money, and expertise in.

But how do you do that? Here are a few tips to keep in mind:

  • If it is a Chamber of Commerce or professional association, visit the office and meet the employees. If it is a volunteer organization, like a Rotary Club, reach out to the management and speak with the board directly.
  • Attend at least two events to get a true sense of the networking group. The first event — whether it was impressive or disappointing — could have been a fluke.
  • Talk to the members about how long they have been involved with the group, how they have benefited from their membership, and if they would recommend you to join the group.
  • Inquire whether anyone in the community has any comments on the networking group you are thinking about joining.
  • Someone you know may be a member of a group or have had previous interactions with one. Go one step further by seeking advice or recommendations from your social media contacts.
  • Think about the value you believe the group can bring to your Raleigh business. Compare the features and benefits of each group. Price may also play a role in this. For example, one networking group may have an all-inclusive price, but another may charge a monthly membership fee. $10, $20, and even $50 may not seem to be much at first glance, but these costs can add up fast and hurt your bottom line.
  • Does the group’s personality/culture match that of your Triangle business? Some networking groups can be uptight, but others always seem to have a fun time no matter what!
  • Is the group’s structure or flexibility what you are looking for? You may want something well-structured where every member bears some accountability, or you may prefer a self-paced group into which you can slowly dip your toes. Find out the networking group’s expectations, and think about if they could be a deal-breaker for you.
  • Joining a committee, volunteering at local events, or becoming a board member are all great ways to truly benefit from a networking group. Sure, it needs a greater level of commitment (and thus more time), but it can be the most fulfilling professional experience you will ever have. You can also volunteer to use your expertise to help the group grow.

Some more things to keep in mind…

  • You must be willing to put in the time required to benefit from being a part of a networking group. You will not gain much if all you are is a name on a membership list. Commit, put in the time, and you will most certainly see results.
  • You can be a member of more than one networking group simultaneously (and we encourage it), but do not join so many that you cannot effectively be a member of any of them.
  • You are the only one who can decide what the best fit for your business is. However, when you finally decide to join a networking group, make a concerted effort to add value by volunteering your expertise. In exchange, you get to take advantage of everything the group has to offer.

Final Notes

There are numerous ways to find local networking events that suit your business needs. And remember, if you cannot find the ideal group for you, you can always start your own.

Call Print and Web Designer at 336-684-6505 or write to us at info@PrintandWebDesigner.com for your networking strategy session today! We can also help you with your company’s branding needs through services such as brochure design, print design, magazine design, and web design. So, stop searching for “Triangle web design services,” “Durham web design services,” or “Cary web design services,” and reach out to us today.

[Infographics] Business Information – Did you Know? 8 Common Tax Deductions

[Infographics] Business Information – Did you Know? 8 Common Tax Deductions

by | Nov 4, 2021 | Infographic, Services

A business’ marketing budget can tie up a lot of capital, so it’s critical that you take advantage of every possible deduction at tax time.

Common Tax Deductions

Website Expense: the amount you pay for a website is a large deductible expense

Social Media: paying a consultant to run your social media accounts

Promotional Print Materials: including brochures business cards, postcards and flyers

Traditional Advertising: from a glossy magazine to a TV spot

Marketing Software: any CRM, social scheduling tools, constant contact

Special Promotions: sponsor for a local event or pay to have your logo featured on a local sports jersey

Consultant: to help design and conduct any of these marketing campaigns

Marketing: content creating, email marketing, graphic design, SEO

Business owners make tax deductions work to their advantage. By doing so they significantly lower their taxable business income.

Any strategy for keeping more cash in your pocket is worth understanding.

Did You Know:

  • Small businesses pay as much as 29.4% in taxes
  • For every $500 you spend on marketing you can save $147 in deductions!

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Print and Web Designer offers top-notch infographic brand design services to boost your visual content marketing efforts. We can also handle other aspects of your brand design needs, including brochure design, print design, magazine design, and web design.

So, stop searching for “Triangle web design services,” “Durham web design services,” or “Cary web design services,” and give us a call at (336) 684-6505 or write to us at info@PrintandWebDesigner.com today.