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Employee W2 or 1099?

Discussion in 'Business Fundamentals' started by Jays Green Daze, Dec 16, 2009.

  1. Jays Green Daze

    Jays Green Daze Member
    from MI
    Messages: 51

    I was wondering what the pros and cons are to paying employees as a W2 employee or to 1099 them and let them worry about their taxes. With the new year starting I only have 3 employees other than myself in the winter but in the summer I will have closer to 6-8 depending on what new contracts are signed this year. If I 1099 them what recourse do I have in my profits as far as taxes are concerned. I should also mention the company is a Corporation "C" in Michigan.
  2. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    Don't even try it. Employees are w-2 only.
  3. Herm Witte

    Herm Witte Senior Member
    Messages: 595

    Agreed! W-2's, Workers Comp., Liability etc. Do it right. You are in business right? Since you are asking this question I also suggest that at a minimum you set up your business as an LLC.

    Herm Witte
  4. Jays Green Daze

    Jays Green Daze Member
    from MI
    Messages: 51

    Thanks for the advice. I have the company setup as a corporation and the past couple of years I have W2 employees. I was just wanting your opinions on whether I should continue or change to a 1099 for the 2010 year. I wanted to know what the advantages of staying with a W2 is rather than 1099 is all. Please keep the suggestions coming and thanks again.
  5. terrapro

    terrapro PlowSite Veteran
    from MI
    Messages: 3,912

    The only advantages is you get the fast track to tax fraud.

    You said it yourself in the title "employees", they get a w-2 period. To be safe with subs they should really have their own equipment and work on their own time BUT in a timely manner. You can't tell a sub what to do but they need to do it to specs if you get my drift.
  6. redman6565

    redman6565 PlowSite.com Addict
    Messages: 1,411

    w-2 is the only way to go. employees will appreciate it more too, specially if you eventually have to lay them off. 1099=no unemployment.
  7. jomama45

    jomama45 PlowSite.com Addict
    Messages: 1,190

    Jays, listen to the others. A few states have already cracked down on the legal description of a sub (1099) vs. an actual employee. It will become far less "cloudy" & easy to get away with in the near future on a fedaral level IMO. Plus, it unethical IMO. Not only is it fraudulant as stated above, but it adds additional responsibility to your employees that should really be your responsibility.