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Are there repercussions to changing and employee from W2 to 1099 and how do I proceed?

I set up a new hire as a W2 employee, issued first paycheck, filed GA. New Hire, etc, then found out she prefers to be a 1099 Contractor instead.  Are there repercussions to changing this once the other process has been started?  How do I proceed?

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Best answer 09-09-2019

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Level 15

"then found out she prefers to be a 1099 Contractor inste...

"then found out she prefers to be a 1099 Contractor instead."

That doesn't apply. The worker doesn't get to choose. The Laws and regulations govern the relationship.

What you are asking about is Worker Misclassification. You have to comply with State and Federal laws; not with what someone asks you to do for them, personally.

Either this person is Working for you, using your tools and resources, under your control. Or, this person is running their Own Business.

I recommend you consult with your own Labor Department.


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2 Comments
Level 15

"then found out she prefers to be a 1099 Contractor inste...

"then found out she prefers to be a 1099 Contractor instead."

That doesn't apply. The worker doesn't get to choose. The Laws and regulations govern the relationship.

What you are asking about is Worker Misclassification. You have to comply with State and Federal laws; not with what someone asks you to do for them, personally.

Either this person is Working for you, using your tools and resources, under your control. Or, this person is running their Own Business.

I recommend you consult with your own Labor Department.


View solution in original post

QuickBooks Team

Welcome to the Community, docleewellness. Currently, the...

Welcome to the Community, docleewellness.

Currently, the feature to change an employee into a vendor isn't available in QuickBooks Online. What you can do is to make the employee inactive and create a new vendor.

Here's how to inactive an employee:

  1. In the navigation bar, click Workers.
  2. Click the employee name.
  3. Go to the Employee details tab.
  4. Click the pencil icon next to Employment.
  5. Click the Status drop-down and select the applicable status.
  6. If required, fill in the Reason for status change, Hire date and Termination date fields.
  7. Click Done.

Here's how to create a new vendor:

  1. In the navigation bar, click Expenses.
  2. Go to the Vendors tab.
  3. Click the New vendor tab.
  4. Enter necessary fields.
  5. Click Save.

That should get you back to business. On the other hand, there are no repercussions when you change an employee to a vendor since you'll be filing an individual form for each of them.

Don’t hesitate to comment if you still have questions. Thank you for dropping by the Community!

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