Contractors know the difference between a W-2 and a 1099

Do you know the difference between a W-2 and a 1099? These are different types of employment and you want to make sure which one you are, especially during tax season so you are filing properly.

If you are being paid by a W-2, you, as the employee, are legally employed by the company, which means whenever you get paid you have had taxes taken your pay. As a W-2 employee, you are covered under your employer’s worker’s compensation insurance. 1099 workers (or independent contractors) do not get taxes taken out of their pay and likely are not insured under anyone they work for.

A W-2 employee can legally work under an employer’s contractor license, since the employer is the license holder responsible for the job and work at hand. A 1099 independent contractor must have his or her own contractor license, and carry his or her own worker’s compensation insurance.

Whether a W-2 employee or a 1099 contractor, insurance and licenses must be held, whether it’s by the employee or the employer. If not, penalties and fines can occur to both the worker and employer as it is illegal to work unlicensed in most states. It is an employer’s best interest to make sure all workers and independent contractors have proper licenses and insurances before any work begins.

If you’re need to get a Florida contractor’s license, the state accepts experience towards the contractor’s license from a person working as a W-2 employee under a licensed contractor, who is properly insured. However if the experience came from 1099 work, even if it’s several years, this cannot go towards the experience needed for a Florida contractor’s license.

Without proper knowledge, many employers and workers, unknowingly, violate the rules above. Make sure your working legally and filing for taxes properly. If any of the above information confuses you, let us know! We can answer your W-2 and 1099 contractor questions.

If you’re looking to get you Florida Contractor’s license, let us help you. We have been helping people get their contractor’s licenses since 2007. 95 percent of our Florida contractors’ licensing packages get approved the first time by the board. We make getting a license easy, and we do it fast. Click our Florida contractor license  page to learn more or call 239-777-1028 to get started on the contractor license process today.

We are a Florida contractor licensing company, and we can help you get your contractor’s license, renew your license, start a business, manage a business, get a credit report, and more.