Glossary · Legal & Admin
What is 1099 Contractor?
Definition
A 1099 contractor is an independent worker who is paid for services without being an employee, and who receives a Form 1099 rather than a W-2 from the business that hired them.
Why it matters
Hiring contractors avoids payroll taxes and benefits, but the classification depends on how the work is actually done, not just on what you call it. Generally, if you control when, where, and how someone works, they may be an employee.
In the US, businesses typically send Form 1099-NEC to a contractor paid $600 or more in a year, with filing due in late January. If you pay a freelance designer $4,000 across the year, you would issue a 1099 and collect a Form W-9 from her up front.
Misclassifying an employee can bring back taxes and penalties. This is general information; rules vary by state, so ask an accountant or attorney before hiring.
Common mistakes
- !Labeling someone a contractor to save money when they work like an employee.
- !Skipping the W-9 and scrambling for tax details in January.
Frequently asked questions
What is 1099 Contractor?
A 1099 contractor is an independent worker who is paid for services without being an employee, and who receives a Form 1099 rather than a W-2 from the business that hired them.
What mistakes do beginners make with 1099 Contractor?
Labeling someone a contractor to save money when they work like an employee. Skipping the W-9 and scrambling for tax details in January.
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