You may have noticed this term come up more often recently. But no clue what it means. If you’re wondering what is a 1099 employee? You’re in the right place. In this article, we will explain what a 1099 employee is, what they do, and why you may consider leveraging this workforce to grow your business.
With the labor shortage that has been going on, many employers have turned to alternative solutions to fill their gaps. This solution has also offered them more flexibility and a new outlook as they can hire differently than how they used to before. Freelancers or independent contractors have gained in popularity immensely these last few years, as more people want to freelance and businesses want to hire freelancers more.
What is a 1099 employee?
A 1099 employee is a US-based freelancer, independent contractor, or self-employed person who works on specific projects, tasks, or missions. They work on a contract basis instead of being a company employee.
You’ve probably guessed it. This comes with many advantages for businesses that no longer need to bear all the complications and difficulties of employing a full-time worker. In fact, 1009 employees are not paid a salary. They are paid based on the deal you make with them before they start their work. No more income tax, social security taxes, medicare taxes, or unemployment taxes. 1099 employees remain independent, so it’s hugely different for you than hiring W-2 employees.
Here’s a recap of the benefits that set 1099 workers apart:
- They are independent freelancers or self-employed who you hire for specific missions or projects whenever you need them. They are not employees that remain on your payroll all the time.
- They send you their invoices. You pay on a per-project or per-hour basis for specific missions. The terms are defined clearly at the beginning, so there aren’t any unpleasant surprises.
- They pay for their taxes. Even if you hire them, since the contract is only mission-based you don’t need to pay for their healthcare or social security benefits.
- They have their own material and equipment. You don’t need to pay for their computer, tools, software, or internet. Even if you hire a 1099 employee who is a photographer, they will have all the needed photography material.
Why work with 1099 employees?
Now that you know what a 1099 employee is, you understand there are many advantages to leveraging the services of these workers. They provide great flexibility to help meet growth objectives. You stop paying for hours employees are less productive and pay only for productive work. You have the flexibility to grow or reduce your team based on your present goals and necessities. But there are even more benefits than that.
Save on unnecessary costs
As mentioned above, with freelancers, you will only pay for specific missions and the time it takes to complete projects. No more paying for unproductive hours or long meetings. Since independent contractors are not your employees, you no longer have to pay salaries, taxes, insurance, benefits, equipment, and software. You only spend money towards completing your project to maximize your growth.
Access professional expertise
When you work with freelancers on specific projects, you can choose the person you will work with. That means you can hire someone who is an expert on the subject and has lots of experience completing that work. Because many freelancers offer niche services, they have experience achieving the best results for these specific services. If you use a full-time employee instead, they may be a great employee but have so many different tasks they work on that it will require them some time to adapt and learn how to complete the current project. Not only can you find freelancers skilled in the precise area of expertise you need. But you can also work with them much faster than a traditional full-time employee, as the hiring would take months.
Constant flexibility
Working with freelancers gives you tons of flexibility, as you can quickly employ their help when needed. You can stop working with them whenever you don’t. If there’s a low season in your industry, you can stop working with them during that time to match your company’s pace. With a lighter payroll, you will have more flexibility with your budget. You can invest it in the employment of skilled independent contractors to complete projects, in a marketing budget to grow your business or save up for more important projects you may have later in the year.
Leverage ComeUp to grow your business
ComeUp is a freelance marketplace where independent contractors or freelancers sell their services. It’s a great place to find skilled professional freelancers around the world to complete your projects. The platform offers security as it is a trusted third party for your payments. When you find a service you want to buy, you can order it and pay. The freelancer will only be paid once they deliver the work and you validate it. That way you’re sure to receive what you ordered.
There are many other added benefits to using ComeUp to find workers compared to the employment of full-time workers. While a 1099 employee is a viable solution for your business. Hiring a worker outside the US on a platform like ComeUp can provide better results for a more affordable price.
Looking for a service? Browse ComeUp today and find the service you need. Save time on hiring and find the skilled professional you need.
How to find a 1099 employee?
Finding a 1099 employee is not as difficult as it may appear. You only need to carefully choose a person qualified to be considered a 1099 employee and have the required skills to complete your project. The IRS has some defined rules for a worker’s eligibility.
Make sure they qualify as a 1099 employee according to the IRS classification
According to the IRS’s legal definition, the main important point is the employer’s control. To qualify as an independent contractor, the person who pays for the services cannot control what will be done or how. They can only direct the outcome of the work.
To determine if the freelancer is considered an employee or an independent, the employer has to observe each case separately based on the following classification criteria:
- Financial control: The resources the workers use are their own like their workspace, equipment, brand, and experience belong to them.
- Behavioral control: Who is in control of the work being executed? Is the worker free to complete the work how they see fit, or does the business control how it is done?
- Relationship between the two parties: This one depends on factors like the benefits the worker receives, the expected continuation of work between the two parties, and whether the worker’s services are an essential part of the organization’s business. Every project must be outlined with the specific length of work on a signed contract to prove that the work performed is temporary.
In addition, the worker needs to possess a business that offers a few client services related to the ones you need. A developer who works with five other businesses is eligible if you need their web development services, for example. Make sure you are compliant with the IRS classification guidelines to avoid all issues.
Search for the freelancer you need online
Now that you understand the IRS definitions and rules, you can search for your independent contractor. There are many online resources you can leverage to find your 1099 employee. Here are some of the most common.
- Networking events and groups
- Ask for referrals
- Online marketplaces like ComeUp (make sure the freelancer you find is in the U.S. and a professional with a registered business)
- Leverage social media like LinkedIn
Networking platforms like LinkedIn are a goldmine for employers who can find people looking for full-time employment and skilled independent contractors. It even helps you save some steps in the hiring process because you have so much information about workers directly on their profiles.
Talk to your candidates
Once you’ve gathered a few candidates, you can go through your decision process. Just like an interview, you can talk to them. Look at their portfolios and ask them for references. There are many ways to measure their skills and talent. The most important is to figure out if that person can complete your project successfully.
Make your offer to the best candidate
Once you find your ideal candidate, you can offer them the project. Consider their years of experience, expertise, the difficulty of the project, and everything else you need to consider to make an offer that makes sense for you and the freelancer.
Make sure to clearly detail your offer with all the needed details. Here’s an example of the details that the offer may need:
- Job title and description of the position
- Goals, objectives, and what needs to be done
- Number of hours needed or deadlines and key dates
- Output and work expected and the deadline for different tasks
- Price, payment details, and conditions
- Special policies about needed resources
Create a legal independent contractor agreement and get it signed
To stay on the safe side of the law. Once you agree on terms, you should sign a contract that will provide protection to both you and the freelancer. A legal independent contractor agreement should be composed of the following information:
- Title of contractor’s autonomous business
- Outline, timeline, and compensation terms
- Temporary worker status confirming they supply their software and equipment
- Non-disclosure deal securing touchy data
- Right to the employment of other temporary workers
- Reasons and methods for early contract end
With ComeUp, you can skip all the forms.
There are a lot of steps in hiring a 1099 employee. But that doesn’t necessarily need to be the case. ComeUp enables you to connect with skilled freelancers all over the world and empowers you to work with them in all security.
A ComeUp seller’s service is their contract, so when you order a service, you know exactly what you will get. Skip all the time-consuming forms and focus on growing your company instead.
When you browse the website you can find services for all your needs. You can check the profiles of the sellers you are interested in to get more information about them. There are also reviews on their services. So you can find one you feel comfortable trusting. In addition, if you have more questions about a service you can contact a seller and discuss it with them. This allows you to place your order with additional security.
Lastly, remember that when paying for a service on ComeUp, you pay in advance, but the seller is paid only once you have approved the work they deliver. This ensures you will receive what you ordered.
How to get the most out of your 1099 employee
Once you’ve gone through the employment process of your independent contractor, you need to do a few things to put them in the best position to succeed.
Ensure good communication and reach out to help
While an independent contractor is not an official employee, they may need help at times. Always communicate smoothly to help them and make them feel like they can contact you in case they need something. Don’t be afraid to share constructive feedback to help them deliver better results.
Increase the price of your contractor’s services as they achieve more work
Once your independent contractor has achieved more projects for you, offer a pay increase based on their performance. Remember that these workers are not bound to you as an employee would be. So, making them feel appreciated is even more important if it’s someone you want to work with more in the future. While some contractors may ask for higher compensation than a full-time employee would. Remember that they have to pay their own taxes and insurance. In addition, they have the expertise to complete their work as fast as possible.
Analyze their results and share feedback with them
You should keep track of their performance to ensure they are achieving good results. If their performance is not up to what you expected, talk to them and figure out what you can do to help them achieve better results.
Understand the evolution of your partnership
Sometimes, it’s hard to admit you’re wrong or to put an end to a difficult partnership. But, if you feel that your relationship with the independent contractor is not evolving well and they are confrontational or don’t absorb feedback on multiple occasions, it’s better to end the partnership before it deteriorates even more.
What is a 1099 employee? Embrace a new way of working
We hope this article helped you understand what is a 1099 employee. As times are changing, more and more businesses have embraced this new way of working that enables them to grow faster year after year.
1099 employees provide so many benefits to a company as these businesses no longer have to pay for a fixed income, file income taxes, file insurance, healthcare, and unemployment taxes. So lighten your payroll without compromising your business growth. The tax benefits are not the only ones to consider as you will also have access to more skilled and specialized workers with these independent contractors.
Instead, employers can plan specific payments to contractors in exchange for these contractors to provide their services. They will take care of their own taxes, insurance, and other forms. Giving you more time and efficiency to grow your business seamlessly.
