1099 vs. Corp-to-Corp
What are the differences between W2, 1099 and Corp-to-Corp consulting?
As an industry leader, The Select Group (TSG) is here to provide useful information to help further the progression of your career. Although 1099 consulting is not currently an option with The Select Group, we want to provide our consultants with as much valuable information as possible on all options of consulting to help make the best decision for your career path.
Corp-to-Corp means that you set up a corporation where you yourself are a member of the corporation and the end user of your services pays your corporation for the services you provide. There are no self-employment taxes, but it can be a much more complicated option since the bookkeeping and tax reporting requirements are sometimes complex. There can be tremendous advantages to starting your own corporation. One of the biggest downsides is the extra time it takes to manage the records and all required tax filings. If you have questions on this option, TSG can provide additional resources.
As a 1099 contractor, you're self-employed and solely operate under an unincorporated business. It's considered to be the simplest form of doing business but can be risky depending on the services you provide. Keep in mind that all your profits are subject to self-employment tax and income tax. Finally, since 1099 workers aren't protected by minimum wage laws, they risk losing money if the job takes more time than expected. Please keep in mind this form of consulting is not offered by TSG.
W2 means you are a full-time employee of The Select Group. You will receive the benefits of being an employee such as access to healthcare, 401k, and other resources. The Select Group is responsible for filing all employee-related paperwork and taxes. We are also responsible for your portion of worker’s compensation and all employer-related payroll taxes. This is the easiest and recommended method for consulting with The Select Group.