Cost, classification and how to choose.
Hiring a W-2 employee and paying a 1099 contractor cost very different amounts — and misclassifying carries real penalties. Here is how to decide.
An employee costs 1.25–1.4× salary once you add payroll taxes, benefits and overhead (calculator). A contractor costs their rate × hours (compare here).
The IRS weighs behavioral and financial control and the relationship. Treating a real employee as a contractor risks back taxes and penalties — when in doubt, lean employee or consult a pro.
Contractors fit variable, specialized or project work; employees fit steady, core roles. Factor in turnover cost with the turnover calculator.