![]() IRS definition of an independent contractor He or she usually isn’t part of the organization’s permanent workforce, and doesn’t receive benefits offered by the employer such as health insurance coverage, paid sick leave or vacation time.Ī W-2 employee, on the other hand, is a worker who is hired by an organization and has the same responsibilities as someone in salary employment. W-2 employees?Īn independent contractor is a self-employed worker who is typically hired to complete a short-term project without any obligations to work for the company on an ongoing basis. So, what’s the difference between 1099 contractors vs. If you’re a California-based company or if you work with or plan to hire California-based workers, check out our resources on the state’s AB5 law. Gig worker classification has become a highly contested topic as states like California rollout expansive legislation about how to classify independent contractors. Steps for paying independent contractorsīefore making payments to a 1099 contractor, it’s important to know how to classify this type of worker in the first place. It’s all to help you understand your obligations as an employer, so you can avoid costly mistakes down the road. We’ve put together this guide that covers all the information you need for how to pay independent contractors: from the W-9 IRS form and 1099 tax documents, to what kind of payment options you have. There are several forms to complete, rules to follow, and different ways to pay. ![]()
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