Need an advice on the tax implications of hiring staff?
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I am facing an issue in hiring a staff, for my small business, as it's important to figure out the tax consequences. So should I hire W-2 workers or private contractors (1099s)? I m interested to know the impact of both methods on Payroll taxes, social security taxes and Medicare payments. Advise me who has already made this kind of choice for their business.
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When hiring W-2 workers, you must manage their payroll taxes, including Social Security, income, and Medicare contributions, and provide additional benefits such as unemployment insurance and health insurance.
However, 1099 contractors bear the responsibility for their own taxes and receive fewer benefits. W-2 workers have more control over their work, despite contractors offering more flexibility and fewer administrative tasks.
If your company wants greater control, then choose W-2; if your company needs more flexibility, then 1099 may be better.