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What Are the Benefits of Hiring 1099 Employees
What Are the Benefits of Hiring 1099 Employees


What Are the Benefits of Hiring 1099 Employees?

Are you looking to hire the best talent for your company? Before you search for traditional employees, you should consider hiring 1099 employees.

Hiring 1099 employees, or independent contractors, have many benefits that you won’t get with traditional W2 employees.

As freelance work becomes more popular, companies can expect to see a surge of talented contractors.

Talented professionals will also want more flexibility and might prefer contractual work over being a W2 employee.

Here’s why you should consider hiring 1099 employees for your company:

It’s Cost-Effective

While laws might be different based on your state, as a general rule you only have to pay a salary to a 1099 employee. You don’t have to worry about paying payroll tax, medical benefits, etc.

In most cases, you aren’t required to pay a minimum wage to a 1099 employee.

You can set your price as you wish. You can pay an hourly wage or a fixed salary. You can also pay per completed assignment.

Your contractor will be responsible for fulfilling their tax obligations. You will have to send them a 1099 form for filing their taxes.

You might want to file 1096 electronically which is the summary of how much you paid your contractors.

They Are Specialists

While traditional employees can also be specialists, many contractors like to master one skill.

If you need a dedicated graphic designer or content writer, you’ll find one in a 1099 employee.

Many freelancers focus on building their expertise in one field. After that, they’ll seek different clients.

As such, your company might not be their only client. However, this shouldn’t deter you from hiring a 1099 employee.

They’ll value the work you give them and dedicate themselves to working hard on your projects.

You’ll often find that 1099 employees are more passionate about their work. Many W2 employees wish to only work for wages, making it much harder to find dedicated talent.

Do You Have Flexibility?

Does your company offer flexible options for working? If so, then hiring 1099 employees is a perfect choice.

For example, is your business much busier during the winter holiday season? If so, you’ll want to hire extra temporary workers during this time. Hiring 1099 employees is a great option for temporary work.

You can also hire 1099 employees to work on a particular project.

For example, when a host is hired for a one-time event they are a 1099 employee.

1099 employees often look for companies that are flexible with their work and projects.

They want to take short gigs that pay well and can get completed quickly.

(Possible) Fewer Lawsuits

One stress that many employers have is possible lawsuits with their employees.

These lawsuits can range from not getting paid minimum wage and/or overtime pay.

It can also extend to discrimination lawsuits, suing for not getting time off, etc.

A 1099 employee doesn’t have the same protections that a W2 employee is entitled to. (The one exception is that racial discrimination is illegal).

But you can hire a 1099 employee and not offer them paid time off if you don’t wish to.

The 1099 employee doesn’t have the right to form a union while working for you to demand extra rights or privileges.

As a general rule, it’s also easier to terminate your contract with a 1099 employee at will.

The possibility of fewer lawsuits alone is a major reason why many companies prefer 1099 employees over traditional employees.

Best for Remote Work

Hiring independent contractors is a great choice if you need remote workers. Most remote workers prefer to work at their own schedule.

If they are digital nomads, you can expect their time schedules to clash with yours.

As such, you need employees who can work at their own pace. You need them to keep up with deadlines even when schedules clash.

Independent contractors are made for this type of work.

If you assign them a project, they’ll find a way to complete the work by your deadline. They need less micro-managing than W2 employees.

If you run a remote company, you might consider hiring talent from around the world. It can get confusing if there are rules for foreign workers versus domestic workers.

To make things easier, it’s best to hire everyone as an independent contractor. The only obligation you’ll have for American workers is to provide them with a 1099 form.

Greater Retention Rates

One of the major concerns that employers have is retention rates. Many younger professionals aren’t loyal to companies and will leave as soon as they find a better deal.

This is also a worry with 1099 employees as they work with several clients at a time.

However, you might find greater retention rates from your 1099 employees. The major difference between 1099 vs W2 employees, is that the former doesn’t have the stability that the latter does.

As such, 1099 employees want to foster great relationships with their best clients. If they like the work they do for you, they’ll keep in touch with you for future opportunities.

For example, let’s suppose you hire a 1099 employee for the winter holiday season.

Let’s suppose this 1099 employee excels at their work. You can expect that they’ll agree to work with your company again next year.

If a 1099 employee completes a project, they’ll await your feedback.

If your feedback is positive and you paid them well, you can expect them to ask you for more work in the future.

As more work becomes freelance, the onus is on the employer to provide benefits to 1099 employees.

There aren’t legal obligations, so you have to decide what benefits to offer them.

These benefits can range from pay to company stock to endorsements. Make sure you treat your 1099 employees well and you can guarantee greater retention rates.

Start Hiring 1099 Employees Today

Now that you know the benefits of hiring 1099 employees, you can start hiring them for your business.

We recommend that you embrace the change to freelance work.

Make your company work for independent contractors. Create opportunities for workers to work at their own pace.

You’ll find that your 1099 employees will provide excellent results for their work. They’ll also be much less hassle for tax and other business obligations.

Please share this guide with other business owners. You can find more great business content on our website.

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