Mike Andes breaks down when someone is a W-2 employee versus a 1099 contractor. W-2s show up at set times in company uniforms; 1099s set their own hours, use their own equipment, and work independently. Misclassifying workers saves taxes short-term but risks fines, and 1099 workers struggle to get loans.
Well, should I have a 1099 or should I have a W2? Here's the really easy answer. You're a W2 employee if you have a uniform and you're required to show up at a certain time. If you're requiring people to be at a certain place at a certain time and they're wearing your uniform, they're probably a W2 employee. On the other hand, if someone's allowed to clock in and out whenever they want, if they're able to wear their own uniform and they're much more autonomous with their own truck and own equipment, they're probably a 1099 or a subcontractor. Although it might save money for the employee in the short run, although it might save the the business money in the short run by saving on payroll taxes, in the long run, the business will eventually get fined, they will be caught, and it will not be worth it. Also in the long run, the employee will need W2 income to be able to get a loan, to be able to go out and get a lease at an apartment, to be a car payment. These are things that are required to be able to prove income. And if they don't have that, eventually they've got to move on.
