The main difference is who pays Social Security and Medicare taxes. W2 employees only pay half (7.65%), while the employer pays the other half. 1099 contractors must pay both halves, totaling 15.3%, known as the self-employment tax.

Yes! Independent contractors can deduct "ordinary and necessary" business expenses—such as home office costs, travel, and equipment—from their total income. This reduces their taxable net income and can lead to significant tax savings.

Not necessarily. While W2 employees pay less in payroll taxes, 1099 contractors can often earn a higher gross rate and utilize business deductions to lower their effective tax rate. The "better" choice depends on your specific income level and business expenses.

Unlike W2 employees whose taxes are withheld automatically, 1099 contractors are responsible for sending tax payments to the IRS four times a year. These are called estimated quarterly payments and help you avoid underpayment penalties at year-end.

We provide specialized bookkeeping and tax planning services for self-employed individuals. We help you identify all eligible deductions, accurately calculate your quarterly estimates, and optimize your entity structure to save you as much money as possible.