From the independent contractor’s perspective, “Corp to Corp” (C2C) implies that as an alternative to paying you, a person, you’ll need to have an LLC or corporation that another business will pay for your services. In this method, their “corp” might be paying your “corp” as an alternative to paying you personally. Corp to Corp implies that you must own a corporation, an LLC, or an S-corporation. Employers favor corp to corp arrangements for three main reasons:

• It trims employment taxes.
• It cuts employment dangers (it’s tougher to sue in a C2C relationship).
• It reduces the chances that the employer might be audited for worker misclassification.

Some of the advantages to being an independent contractor with a corp to corp arrangement include:

• Increased pay, as most C2C preparations generate a pay increase of 10 percent+ over W-2 salaries.
• Leverage your business for tax savings that you simply couldn’t have as a W-2 worker or a sole proprietor.
• You will have your own individual enterprise.
• Hire different workers to do the work.
• Stack contracts.
• Earn a living from home.
• Having a corporation can shield you in the chance of a lawsuit, money owed, etc.

Let’s answer some of the more common question about Corp-to-Corp | C2C:

How does Corp to Corp work?

A corp-to-corp job is a job between two companies. The hiring company contracts with the placement agency, which then hires the employee and puts them to work for the client company. Often, recruiters arrange these jobs, specializing in finding temporary or contract workers for companies.

What does Corp 2 Corp mean?

If you’re using a corp-to-corp relationship with someone, it just means that you’ll pay an LLC or corporation for services rather than the individual worker.

What is C2C vs W2?

Taxes and benefits: In a C2C arrangement, the worker is responsible for paying their own taxes and benefits. In contrast, in a W2 arrangement, the employer is responsible for withholding taxes and providing benefits such as health insurance and retirement plans.

What is a C2C employee?

Corp-2-Corp is a contract in which one corporation hires another corporation and pay the salaries for the work of another corporation. To work under C2C position employee must have a business S-corp or an LLC.

Does Corp to Corp require a 1099?

An easy way to remember the IRS rule is that corporations do not receive 1099 forms regardless of whether they are S or C corporations. Sole proprietors, partnerships, and unincorporated contractors do. You should also issue 1099-MISC forms for: Lawyer fees, even if the attorney is incorporated.

What is a Corp to Corp rate?

If you’ve ever asked yourself, “What is Corp to Corp Rate,” in a nutshell, “Corp to Corp” means that a corporation is paying your corporation instead of paying you directly as an individual. For this to take place, you need to have an LLC or a corporation set up for yourself.

What is the difference between Full-Time and Corp to Corp?

The main difference is benefits. Full-time employees are usually afforded healthcare benefits, worker’s compensation, disability and paid vacation, while contract workers are not, though if you do set up a corp-to-corp, you can set up your own paid vacation any way you want and set up your own healthcare benefits.

Is it better to be an S corp or C Corp?

Single layer of taxation: The main advantage of the S corp over the C corp is that an S corp does not pay a corporate-level income tax. So any distribution of income to the shareholders is only taxed at the individual level.

Is C2C better than 1099?

The major difference between C2C and 1099 is that with C2C, you don’t have to pay self-employment taxes on your income. However, you must pay yourself a set salary, as well as pay all required employee and employer taxes.

Why do companies prefer W2 over C2C?

Employers reap certain benefits when they hire W-2 employees. W-2 workers bring stability to a company. Once they sign your company’s contract, you do not need to worry about losing them to other jobs. The employees will have an opportunity to adapt to the company culture.