W2 Employees vs Independent Contractors

Written By David Wood

When it comes to deciding whether you want to remain a W2 employee or go the route of the independent contractor, there are quite a few things to consider. At what point in the year do you want to pay your taxes? How are deductions affected? Will you need to set up an LLC? Let’s make sure you’re making the most informed decision possible before making the leap either way. Check out this video and let our team member Tim dissect it all for you.

Let’s Break It Down:

  • More structure

  • Employer pays half of SS and Medicare tax

  • Employer withholds taxes throughout the year

    BUT

  • Less individual freedom

  • Less deductibles

  • More individual freedom

  • Any expense is deductible

  • Opportunity for expansion (ex: from an LLC to an S-CORP

BUT

  • Must pay employers portion of SS and Medicare

  • Must make your own estimated tax payments throughout the year

  • Truly only appealing if you can get 20% more of the income than W-2

David Wood
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