1099 vs. W-2

Two different worker classifications with very different tax, insurance, and control implications.

A W-2 employee has taxes withheld, gets workers' comp coverage from the employer, and is directed in how the work is done. A 1099 contractor (independent contractor / subcontractor) is paid gross, handles their own taxes, carries their own insurance, and controls how the work is performed.

Misclassifying a W-2 worker as a 1099 to save on taxes and workers' comp is one of the most common ways small contractors get hit by the IRS or state labor department. The classification is based on facts (control, integration, financial risk), not what you call it on paper.

Related

• Workers' Compensation — State-mandated insurance that pays medical bills and lost wages when an employee is hurt on the job.
• Burden Rate — The true fully-loaded cost of an employee per hour — wages plus payroll taxes, workers' comp, benefits, and other employer costs.
• Compare contractor CRMs — FieldKrew against Jobber, Housecall Pro and ServiceTitan
• Lien Waiver — A signed document where a contractor (or sub or supplier) gives up their right to file a mechanic's lien on the property — usually in exchange for payment.
• Mechanic's Lien — A legal claim a contractor can file against a property when they haven't been paid for work or materials provided to that property.
• Preliminary Notice (NTO / 20-day notice) — A notice the contractor or supplier sends early in a job, preserving the right to later file a mechanic's lien if they aren't paid.