The Difference Between W-2 Employees and 1099 Contractors (And Why It Matters)

Written By Adam Ramroop

Hiring help is exciting for a growing business—but are they a W-2 employee or a 1099 contractor? The IRS cares, and misclassification can lead to costly penalties.

W-2 Employee

  • Works under your direction and control.

  • You provide tools, set schedule, and manage how work is done.

  • You must withhold payroll taxes, pay employer taxes, and provide a W-2 at year-end.

1099 Contractor

  • Self-employed and controls how work is performed.

  • Provides their own tools/equipment.

  • No payroll taxes withheld; they handle their own taxes.

Why it matters:
Misclassifying a worker can result in back taxes, fines, and legal headaches.

Pro tip: When in doubt, lean toward employee classification or get professional guidance.

✅ Not sure if your workers should be W-2 or 1099? I’ll review your situation and help you stay compliant. [Book a free consultation → calendly.com/adam-ramroop-tax-hub/consult?month=2025-08]

Adam Ramroop
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