W2 or 1099? The Misclassification Trap

That contractor on your books might actually be an employee—according to the IRS. Worker misclassification is one of the most common and most expensive mistakes.  The IRS doesn’t care what your contract says—it looks at the actual relationship through three lenses:

🔹 Behavioral control — Who decides how and when the work gets done?

🔹 Financial control — Who controls tools, expenses, and how the worker is paid?

🔹 Relationship of the parties — Benefits, permanency, and how core the work is to your business.

The more control you exercise, the more likely it’s a W2 employee—and getting it wrong means back taxes, penalties, and back wages. When in doubt, document your reasoning and check with your CPA before you onboard; it’s cheaper than untangling it after an audit.

What’s the trickiest classification call you’ve had to make?

Email to connect!