StartEaseEmployee or contractor? How to tell
How the law tells an employee from a contractor, which forms each one needs, and how StartEase keeps the two apart.
How do I know if a worker is an employee or a contractor?
The law decides it from the facts, mainly who has the right to control how the work is done. The same person should not be reported on both a Form W-2 and a Form 1099 for the same work.
Why does it matter?
The two are handled differently from the first day: different forms to collect, different year-end form, and a different page in StartEase. Putting someone in the wrong group means the forms and the tax handling are wrong too.
What is the difference?
| Employee | Contractor | |
|---|---|---|
| The test | Works under your control | Decides how the work is done |
| Forms to collect | Form W-4, and Form I-9 Section 1 by the first day of work | Form W-9 for a US person, or a W-8 form for a foreign person |
| Year-end form | Form W-2 | Form 1099-NEC, if you paid $2,000 or more (check the IRS instructions for the amount) |
| Where in StartEase | Employees, and the employee's own My profile | Contractors |
| Tax ID | The employee's Social Security number, which you can type once | The contractor's tax ID, which you can type once |
How does StartEase keep them apart?
StartEase stops a payroll that reports the same person as both an employee and a contractor for the same work. The message names the problem and your payroll manager corrects the record. See Why can't I approve my payroll?
What should I do if I am not sure?
Ask your payroll team or your adviser before you pay. This guide does not decide a person's status, because the answer depends on the facts of the work.
Common mistakes
- Paying someone as a contractor without a Form W-9 or W-8 on file.
- Reporting the same person on both a W-2 and a 1099 for the same work.
- Deciding by what the worker is called, not by how the work is controlled.
Related guides
Form 1099-NEC, What is Form W-4?, What is Form I-9? and New-hire checklist for employers.