Should Your Employee Be 1099 or W-2?

W-2 vs. 1099: A Simple Advice for Small Business Owners

If you’re running a small business, you’ve probably asked yourself at some point: “Should I pay this person as a W-2 employee or a 1099 contractor?” It’s a common question — and an important one.

The good news is that it doesn’t have to be complicated. The IRS looks at three main areas when deciding how someone should be classified:

• Behavioral Control – Do you tell them how, when, and where to do the work? If yes, they’re probably a W-2.

• Financial Control – Do they use their own tools and have the chance to profit (or lose)? That leans toward 1099.

• Relationship – Is the work ongoing and part of your core business? If so, W-2 is the safer bet.

Here’s an easy way to remember:

• If you’re treating them like part of your team → W-2 employee.

• If they run their own show and help you on a project basis → 1099 contractor.

To make this easier, we’ve created a free one-page checklist you can download. It breaks down the key questions in plain language so you can feel confident about your decision.

At the end of the day, the goal is simple: give your workers the right setup and give yourself peace of mind.