When it comes to staffing in the United States, there are a lot of different tax terms that you need to know about. These tax terms can have a significant impact on your business, so it's important to understand them. Here is a quick rundown of some of the most common tax terms that you will come across when staffing in the US:
W-2: This is the most common type of tax term in the US staffing industry. W-2s are issued to employees by their employer and they are used to report income and withhold taxes. W-2 employees are considered to be full-time employees. This means that they are paid a regular salary and are also eligible for benefits. Their taxes are withheld from their paycheck each week.
1099: This is another common type of tax term in US staffing. 1099s are issued to contractors and they are used to report income and withhold taxes. 1099 employees are considered to be independent contractors. They are paid by the project or hour and are not eligible for benefits. They are in charge of covering their own taxes.
Corp-to-Corp: Corp-to-Corp staffing arrangements are between two companies. The employees of one company are hired by the other company. The employees are considered to be employees of the company they are working for and are not considered independent contractors.
Payroll Tax: This is a tax that is withheld from an employee's paycheck. Payroll taxes are used to fund Social Security and Medicare.
State Tax: This is a tax that is imposed by the state in which an employee works. State taxes vary from state to state.
Federal Tax: This is a tax that is imposed by the federal government. Federal taxes are used to fund the federal government's operations.
There are many other tax terms that you may come across when staffing in the US. This is just a quick overview of some of the most common tax terms that you will need to know about.