1099 vs W-2: What Business Owners in Greece, NY Should Know Before Hiring

As a small business owner in Greece, NY, bringing on help is a big step. But before you hire that contractor or employee, you’ll need to make an important decision — are they a 1099 independent contractor or a W-2 employee? Misclassifying workers can result in costly IRS penalties, back taxes, and compliance issues.

At Nacca & Capizzi, we help local business owners navigate hiring and payroll decisions with confidence. Here’s a breakdown of what you need to know before making your next hire.

Understanding the Difference: 1099 vs W-2

W-2 Employees are on your payroll, and you’re responsible for withholding and paying their income taxes, Social Security, and Medicare. You also typically provide benefits such as paid time off, health insurance, or retirement contributions.

1099 Contractors are self-employed individuals who provide services to your business under a contract. They’re responsible for their own taxes and typically do not receive benefits. They often work on short-term projects or part-time arrangements.

Here's a quick summary:

Factor	W-2 Employee	1099 Contractor
Tax Withholding	Employer withholds/pay taxes	Contractor handles own taxes
Control	Business controls hours, tools, methods	Contractor controls their own work
Benefits	May include PTO, insurance, etc.	No benefits provided
Longevity	Often permanent or long-term	Project-based or temporary

Why Proper Classification Matters

Misclassifying an employee as a contractor can lead to serious consequences:

• Back taxes, including unpaid Social Security and Medicare
• Penalties and interest from the IRS and NY State
• Liability for missed unemployment insurance payments

Proper classification also protects your business from wage disputes, wrongful termination claims, and other legal risks.

Need help determining how to classify a worker? Our business advisory services can guide you through this process with confidence.

Questions to Help You Classify Correctly

The IRS uses a few key questions to determine classification:

1. Behavioral Control: Does the business control how the worker does their job?
2. Financial Control: Does the business control how the worker is paid or reimbursed?
3. Relationship: Are there written contracts or benefits suggesting a long-term relationship?

Generally speaking, the more control your business exercises, the more likely the worker should be classified as a W-2 employee.

How to File the Right Forms

Once you’ve classified your workers, here’s how to stay compliant:

• W-2 Employees: File Form W-2 and submit quarterly payroll reports. You’ll also need to issue pay stubs and comply with wage laws.
• 1099 Contractors: Issue Form 1099-NEC to anyone you’ve paid $600 or more during the year. There’s no withholding required unless backup withholding applies.

If you need support filing forms, managing payroll taxes, or maintaining accurate records, Nacca & Capizzi offers bookkeeping and payroll support to make compliance easier.

Which Option Is Right for Your Business?

There’s no one-size-fits-all answer. Contractors can be great for flexibility and short-term projects, while employees offer reliability and long-term growth. The best decision depends on:

• Your control over the work and schedule
• The tools and training you provide
• How long and how often the worker performs services for you

Still unsure? Our team can help you evaluate your situation and avoid classification errors that could cost you time and money.

Partner with Local Experts in Greece, NY

Hiring support is a sign of business growth — and we’re here to make sure you do it right. At Nacca & Capizzi, we help businesses in Greece and the Greater Rochester area navigate hiring, tax filings, payroll, and long-term financial planning.

Whether you're expanding your team, hiring your first contractor, or cleaning up your records, our CPAs are here to guide you every step of the way.

Call (585) 225-9290 or schedule a consultation online to make smart hiring decisions backed by trusted local experience.

Disclaimer: This article is for informational purposes only and should not be considered legal or tax advice. Please consult with a professional at Nacca & Capizzi for guidance tailored to your business.