Question

how do I convert employees *contractors to W2 from 1099? What do I need besides a W4?

I have a small business and my staff is mostly part-time people who we pay as 1099. A few work 25+ hours, and after countless hours of submitting to group health insurance plans (3) we found out that the reason we keep getting rejected for group insurance is that we have no one as a W2. OK-so besides the Payroll accounting I need to set up, which seems straightforward, I cant seem to find out what 'else', besides filling out W4s, do we need to 'do' (ie fill out or file or pay or whatever) to 'convert' someone from 1099 to W2 status. If you can help you will be enabling people and families to get healthcare! Thank you!!!

3 years ago - 3 answers

Best Answer

Chosen by Asker

Once you convert them to employees, the IRS will want to know why you initially listed them as contractors. The main reason employers do this is to avoid paying FICA, benefits and payroll tax. Fill out a form SS-8 to see if you have been in compliance..

3 years ago

Other Answers

getting a w-4 and an I-9 is about it; if the state has an equivalent of the w-4 get one of those from each employee too.
start paying the payroll taxes as required and poof - you now have employees.
the Feds will also require that you verify SSNs as shown on the W-4/I-9

by wg0z - 3 years ago

Federal W-4, State Equivalent W-4(if applicable), and I-9 are the forms necessary, but you simply need to keep those filed at your company. You don't need to send them anywhere.
I personally wouldn't recommend doing a SS-8, unless your accountant advises it.

This is the type of issue you should make sure your accountant is aware of. Since this will affect payroll taxes and quarterly tax returns, you are going have contact with him/her soon, anyway. Also, there may be specific details he/she may be privy to, in your business, that could affect how or even whether you convert the 1099's.

by Bryan - 3 years ago