The Difference Between 1099 and W-2 Employees

By Mariah Venus Email Mariah

By Mariah Venus
Email Mariah

As bookkeepers, we often have clients ask us about the difference between a 1099 and a W-2 employee.  It’s actually a pretty straightforward question to answer: Employees who you pay either hourly or by salary should receive a W-2, while an employee you pay based on a contract with a defined term should receive a 1099. The decision to make an employee a W-2 or 1099 employee should be determined by the needs of the business and the future plans for the employee. An employee cannot be both a 1099 and W-2 employee at the same time.  

For employers, determining the classification status of employees and clearly communicating this status is important for taxation. For a W-2 employee, the employer withholds the taxes and sends those taxes to the IRS and state. For a 1099 employee, it is the expectation that the employee will pay the appropriate taxes themselves (both employee and employer amounts) to the IRS and state. Employers will need to have a W-4 and state withholding tax form on file for W-2 employees. The W-9 is the form needed to hire a 1099 employee.

Although the responsibility for withholding and paying taxes is different, the employee responsibility for under- or over-payment of taxes is the same. For example, if the employee with a W-2 has pre-determined percentages of each paycheck withheld by the employer and the IRS determines that the amount was too small at tax time, the W-2 employee will still have to pay the difference. For the 1099 employee who was responsible for paying estimated taxes throughout the year, if the IRS determined the payments were too small, that employee will also have to pay the difference.

Remember, BKE can help you know what questions to ask, keep you informed of important updates and advise you on what’s right for your business.

BKE at 2015 Anytime Fitness Annual Conference

Our very own Kerry Sarver recently attended the 2015 Anytime Fitness Annual Conference in Nashville, TN. She spent time with some of our current clients, met with gym owners looking for a better way to handle their accounting & bookkeeping, and spoke with gym owners who are just getting started with their Anytime Fitness journey and want to get set up correctly.

We love working with Anytime Fitness gym owners - they're awesome clients, and it's been exciting to watch the entire franchise concept grow over the years! 

Thousands gathered in Nashville to be entertained, educated, and inspired at the 2015 Anytime Fitness Annual Conference. It’s time to turn it up!
— The Anytime Fitness Team

More Invoicing Tips & Tricks

  By Mariah Venus   Email Mariah

  By Mariah Venus

  Email Mariah

Today I want to talk through invoicing features and some other important aspects of invoicing.

Great Invoicing Features

Most invoicing modules have pre-built tools to gain efficiency and consistency.  Some examples of these tools are listed below:

  • Recurring invoices - most invoicing add-ons and accounting software applications have a recurring feature for invoices.  Utilize this for clients for which you do regular recurring services or have a monthly contract with.  This automation will limit your need for data entry and give you back valuable time!
  • Copy or duplicate - often you may find yourself creating invoices with the same basic items and descriptors.  Most invoicing add-ons and accounting software applications have the ability to copy or duplicate a previously created invoice.  You can do this either for the same customer who often has the same needs or across customers with similar sales.
  • Items - you can create pre-detailed items that include all the applicable data (name, description, price) or even create generic items that have some of the common info -- and allow you to fill in the rest on individual invoices.  i.e. - you provide a service that changes slightly from client to client but is always charged at the same rate. Create a generic item called Services, provide a generic description with room for you to modify it later and leave the price section 0.00.  When it is time to create an invoice, use this item, fill in the blanks in description and update price according to the agreement with your client.   
  • Job costing or business expensing - many tools will actually allow you to associate specific costs or expenses directly with a customer, making it easier to track the items you need to charge your customers.


Invoicing should be done in accordance with your company policies and processes.  You will want to decide how, what, and when before services even begin.  Keeping your invoicing consistent will not only make the process easier for you, it will keep your clients happier!

Remember, just because you’ve been managing your invoicing the same way forever, doesn’t mean you can’t go back and change settings and modify policies to get things ship-shape now!



Finally, check, double check and triple check your invoices before sending them to clients.  Data errors, misspellings, bad grammar or punctuation and/or incorrect totals will cause your clients to lose faith in you and actually make it less likely they’ll pay you quickly.  Remember, your invoices are samples of your business advertising and branding, and you want your invoices to be perfect.  Not only that, but as the communiqué that gets you paid, you want the terms and details to be perfect.  


Make sure to check out my first Invoicing Tips & Tricks, too. Subscribe to our posts to get updates sent to your inbox, or check back frequently. 


Happy invoicing!

Invoicing Tips & Tricks From a Master Bookkeeper

 By Mariah Venus   Email Mariah

 By Mariah Venus

  Email Mariah


Your invoice is often either the first or last indication of your brand, depending on whether you bill before or after service. You should trademark your invoice in common with your business. Not only should it include your actual brand logo and contact details, but it should match your company image in tone, terminology and character. Most accounting software systems (such as Xero or QuickBooks) and invoicing tools (such as  FreshBooks or Harvest) have invoice templates that are modifiable to accomplish a great deal of business branding within your invoice templates and even have multiple options for templates. For instance you may want different invoice styles for recurring invoices versus one time sales.


The content of your invoice is vital to getting paid. It not only tells your client how much to pay you, but why, when and how. All the major items that should be included in content are listed below:

  • Client details - client name, contact info and details about project or job - these will often auto feed from your accounting software,  or specialized invoicing tool providing the data is complete and the template includes it.
  • Services, items, fees and taxes - most invoicing modules will allow you to create "items" with pre-entered descriptions, prices and mapping to specific types of income.  This can be very valuable and time saving if you offer specific services, items and charge scheduled fees.  Use quantities and different items to really give your clients details about what you have charged them.  Make sure to use terminology that is clear to your client and in line with your business brand.
  • Terms - be sure to include not only the date of service and invoicing, but also the terms for payment so that the client knows when to pay you!
  • How to pay - the easier it is to pay you, the faster the client is likely to pay.   
  • Invoice number - this is really valuable information to both you and your client. It provides much needed tracking information to make sure you get paid, and so they can make sure they have paid you!  Be sure to use a number system that makes sense to you and is easy to incorporate into your accounting software or invoicing system.  Most invoicing systems will auto create invoicing numbers but are somewhat modifiable in the number format.
  • Notes - An invoice is a great opportunity to tell your client  that you appreciate their business, encourage them to give feedback -- or even notify them of upcoming sales, events or changes. In actuality, you can make your invoicing solution a promotional tool!

We'll have more invoicing tips and tricks to share next week! Subscribe to our posts to get updates sent to your inbox, or check back frequently. 

Mobile Payments: What To Look For In The Near Future

In recent history, payments have been making a change from the traditional use of cash, to payments with cards, to now using our mobile hand-held devices. The transition into mobile devices has been one that started off slow in 2011 with Google creating the platform Google Wallet, but now is increasing rapidly with the likes of Apple, Samsung and major retail stores getting involved, so much so that Forrester forecasts a 48% compound annual growth rate leading to this industry producing $90 billion in annual revenue by 2017. With so many options, you might wonder which product to use, how these products work and/or which would benefit you as a business owner/user. As with any growing industry, there are dozens of options to be aware of, with different ways of addressing the task at hand. We want to discuss some of the main players in the mobile payments market, based on their size and dominance, and their forecasted success based on their technology and accessibility.

The most popular option in the media has been Apple Pay. This is solely due to Apple’s marketing, not to their success in mobile payments thus far. In terms of their mobile payment strategy, Apple uses NFC (near-field communication) in their most up-to-date mobile devices (iPhone 6, iPhone 6 Plus, etc.) which can be read by certain point of sale machines. To use this, you wave your mobile device over the pad as you check out, and the system reads the payment information stored on the mobile device. Because this is a recent tool, it is exclusively offered on Apple devices and only 220,000 merchants (2% of all retail stores) have this sort of technology in their shops. In addition, it only has access to 90% of United States credit cards, excluding the smaller, local credit cards. This makes the tool less desirable in a retail market that prefers an all-or-nothing solution. Many different sources in the news have been claiming that this type of system will be more secure than simply using a card to pay, as there is a necessary fingerprint and pin access to use the NFC technology on a mobile device. But with all these benefits, you would think this system would rapidly expand: just ask Google Wallet, which has been attempting this use of NFC for three years with little response from the market.

Google was the first to introduce NFC, with their newest application for their Android platform. The major differences between Google Wallet and Apple Pay are that Google Wallet has a larger current user base (16.4 million, compared to Apple Pay’s 1.2 million as of October 2014) and their ability to integrate with more mobile platforms. Google Wallet does have an issue with the number of point of sale systems that can use the NFC technology, and some of the biggest chains disabling this system for their own sort of mobile payment. For example, chains such as CVS, Walmart, Target, Rite Aid and many others are opting for a different type of mobile payment known as Current C.

Current C has been described for almost three years as having the potential to become the next big mobile payment system. The biggest issue is that it is still a prototype, looking to come out as soon as early 2015. What makes it different is it uses QR codes, which are recognized by most checkout scanners and digital offers. It even has added benefits to the client, such as no swipe fees, which are the processing fee that retailers pay when an individual uses their credit card. The potential target demographic for Current C would be much larger than that of both the Apple Pay and Google Wallet NFC tools combined.

Another application that has some businesses intrigued is LevelUp, a program that offers discounts to customers but also no merchant service fees to businesses. Combining the best of both worlds, LevelUp uses QR codes to scan customer’s mobile device for their payment information and transfers it to the business’ point of sale system via the LevelUp scanner. LevelUp bases its revenue on a percentage of every discount it offers to customers: every time they have a special offer for a customer, LevelUp could see a large percentage of the revenue on that sale, making up for the fact they do not charge a merchant service fee to the client. Because every business needs to purchase the scanner that attaches to their point of sale system, only 14,000 locations have adopted this program, but they contain over 2 million customers. Other similar systems have been adopted by multinational chains such as Starbucks. Starbucks partnered with a major mobile point of sale service called Square in order to make it mobile payment services available in 7,000 of the coffee chain’s outlets. This type of service is slowly being implemented in other chains such as McDonald’s, but due to the cost of updated equipment, it has taken time to adjust.

The jump to mobile payment systems has been addressed by some major companies, and there are more in the prototype stage that could be something to keep an eye on, most notably PayPal and Samsung. PayPal has created an API (application program interface) called PayPal Here, which will allow businesses to connect credit card readers to their point of sale terminals in stores. This option will be more prevalent in smaller merchant shops, competing with the likes of Square. Samsung, the largest cell phone producer in the world, is in talks to acquire LoopPay, a startup which describes itself as the most accepted mobile wallet on the planet. This plan would give Samsung an edge over competitors such as Apple Pay, as they will have access to all credit cards and payment terminals from the get-go. This technology will not use NFC but a magnetic signal which simulates the swiping of the magnetic strip on a card. Its only downside is it lacks the security measures that are offered by NFC-based systems.

More competition, including smaller companies and start-ups, will continue to pave their way into the mobile payments market, making it tough to keep up with the latest technology. Business owners and customers alike should look into the two biggest successes thus far, being Apple Pay (after its major success with iPhone 6) and Samsung (with its acquisition of LoopPay) for their mobile payment needs. But don’t get attached to any of these systems just yet; the mobile payments industry is still developing and could take a new direction at any moment.