What Is a 1099 Subcontractor?
A 1099 subcontractor is a person or business you pay as an independent contractor, usually by the job or a share of it, instead of wages. Classification is a legal question, so this entry only describes.
What Is a 1099 Subcontractor? The Practical Differences
| Question | Independent contractor (1099) | Employee (W-2) |
|---|---|---|
| How are they paid | Per job or a share of a job, by invoice or on a split | Wages through payroll |
| Who tells them how to work | They decide how the job is done | The employer directs the work |
| Tools and parts | Often their own | Often the employer's |
| End of year form | A 1099 form from the payer | A W-2 |
This table is a simplification. It is not how anyone decides which a worker is.
Not Advice
Whether a person is an independent contractor or an employee is a legal question, and the answer depends on the facts of the relationship, not on what you call them. The IRS explains how it looks at it on its page Independent Contractor (Self-Employed) or Employee?, and its page About Form 1099-NEC explains the form. Ask an accountant for your case. This entry does not give tax or legal advice.
How It Is Usually Misread
- Calling someone a 1099 sub because they bring their own truck. The truck is one fact among many.
- Treating the percent split as the test. The split is how they are paid, not what they are.
Related Terms
Gross Margin Per Job. In the app, a sub is the person who gets a cut of the job on the Team, Subs tab.
How the split itself works, with numbers, is in How to Pay a Subcontractor on a Split.