Choosing between W-2 and 1099 Forms for Worker Compensation

In a lot of ways, you’re not allowed to simply choose all willy-nilly whether you classify and pay workers as employees or independent contractors. But by familiarizing themselves with the rules from the beginning, many business owners can create a productivity strategy that best makes use of their workforce options. Learn more about the parameters of this choice and how the versatile software solution from Advanced Micro Solutions (AMS) ensures that the switch between filing w-2 and 1099 forms is an easy one.

The Rules for W-2 and 1099 Forms

There is a somewhat nebulous set of criteria that revolves around 3 general principles:

  1. Behavioral Aspects of the Work: Who controls the day-to-day work and schedule?
  2. Financial Compensation of the Work: Are traditional employee benefits provided to the worker?
  3. The Type of Relationship between Payer and Payee: Is the work seen as a discrete project, or an ongoing relationship?

The IRS acknowledges that there may not be an easy, definitive way for people to make this determination when different parts of the criteria are at odds with one another. For this reason, the IRS created Form SS-8. Using this form, you can ask the IRS to make a formal determination.

Industry-Related Factors for Productivity

What’s the difference between contract work and ongoing employment? What’s the difference between a discrete skill that’s not really integrated with the rest of the business, and an integral part of the company’s product and/or service model. Especially in an economy increasingly dominated by e-commerce but also in a wide variety of specific industries, there’s not always a clear bright-line. Moreover, full answers to these questions can potentially involve disclosing proprietary information, further complicating the process and any formal determinations that are made by the IRS.

To this point, beyond simple individual classifications, choosing between a workforce of employees vs. independent contractors also have various tax-based incentives as your company grows and hits different thresholds.

Our W-2 and 1099 Forms Software

Here’s the good news. Our W-2/1099 Forms Filer provides all the software support you need for both w-2 and 1099 forms filing, including support for all 50 states and DC. Better yet, this intuitive, menu-driven platform ensures you have immediate, detail-oriented support, while our commitment to customer service and software development offers the peace of mind that your software solution can adapt to the evolving composition of your company’s workforce.

A Common Payee File, for example, eliminates a huge amount of duplicate data entry—as does our powerful data file importing. Entering information on a screen that resembles the actual tax form offers the clarity preferred by most small business owners, while our spreadsheet format feature is more often preferred by accountants looking for that extra measure of efficiency.

More Software Products and Prices

  • W-2/1099 Forms Filer (required platform)
  • Payroll Module
  • E-File Direct
  • Affordable Care Act Filer
  • 1042-S Filer
  • Software-Generated Forms
  • Forms Filer Plus

Buy your software now, download our demo, or call our Sales and Information team at (800) 536-1099.

Software Solutions from AMS

Our W-2 and 1099 Forms Filer is our only required platform. From there, users pick the services they need. Choose from the tools below to build out your customized accounting software.