tax implications for a small business

[Mark Brogan]

I currently own a small plumbing business

I am trying to figure out if I am better off having employees on my payroll or having them on a 1099?

we currently work for a big box retailer that pays us on a 1099

my plumbing business is set up in an s corporation

thanks for your help

[Brandon Hall]

@Sylvia B. You most certainly can "choose what you want" as long as you model your business appropriately. For instance, instead of hiring a full-time employee, you hire a part-time vendor who is free to take on other clients. You build a business around that type of model and now you only have contractors on staff rather than employees.

@Mark Brogan from a dollar perspective, it's much more costly to hire an employee. You have payroll, insurance, additional overhead, benefits, new overtime rules, etc. A contractor incurs all of those costs instead. You just pay their fee and be done with it.

As an aside from an efficiency perspective, it could be argued that a full-time employee will bring more efficiency to the table. I've not yet been in business long enough to test this, but I feel that contractors could bring much more efficiency to the table as they are compensated in a manner that inspires innovation.

I'm a big believer in results only compensation. I still haven't figured out how you can pay employees based on results unless they are paid on commission.