In some business scenarios, you might find the need to change the status of a contractor (1099) to that of an employee (W2) within your PRO system. This transition is essential for accurate record-keeping and compliance with tax regulations. This article guides you through the process of converting a 1099 contractor to a W2 employee in PRO, ensuring a smooth and compliant transition.

Steps/Procedures:

1. Terminate the 1099 Profile: Start by finalizing the contractor’s profile as a 1099 employed contractor. This should be done following their final payroll period in this status. This step ensures that their 1099 employment record is properly closed in the system.

2. Rehire as a W2 Employee: Next, proceed to ‘rehire’ the individual, but now as a W2 employee. This rehiring process is crucial as it maintains the continuity of the individual's association with your organization.

3. Preservation of Records: One of the benefits of this process in PRO is that it saves the individual’s past information and payroll history. This ensures a seamless transition with minimal data loss.

4. Completion of Required Documentation: As part of their new status, the individual will need to complete several important documents:

   • I9 Form: Verification of the employee's legal right to work in the United States.
   • Federal W4 and State W4 Forms: Necessary for determining the employee's tax withholding.
   • Direct Deposit Information: They should confirm or update their bank account details for payroll purposes.

5. Signing eHire Documents: Finally, the employee will be required to sign off on any eHire documents that are part of your company’s onboarding process for new employees.

Troubleshooting:

• If the individual’s previous information doesn't transfer correctly, double-check the termination and rehire entries for accuracy.
• Ensure that all required documents are completed fully and correctly to avoid any compliance issues.
• If there are problems with payroll processing after the status change, review the employee’s payroll setup to ensure that all details have been updated correctly for their W2 status.

Related Resources/Links:

• Transitioning from Contractor to Employee
• Understanding Employee Onboarding in PRO
• Payroll Processing in PRO: A Comprehensive Guide