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Hi Op,

Thanks for your question. That is a very open-ended question, that without diving into your books and knowing your location (state laws) is impossible to answer. However, here are some universal statements to keep in mind when making such a decision. Again, without knowing the details of your company, I can’t give you direct insight:

• For most trade companies, highest long-term profitability comes from W-2 employees.
• 1099s are efficient for geographic expansion, specialty work, or short-term overflow work.
• 1099s are often more costly because of callbacks (as you mentioned), warranty work, company reputation, lost referrals, and inconsistent customer service and work quality. If more than 25% of your projects/jobs are requiring call backs or rework, then you’ve lost any margins and 1099s are costing you money.
• 1099s are effective in the short-term because of no payroll taxes, benefits, and ability to scale.
• Long-term subs are often the worst of both worlds because they act like contractors but expect to be treated like employees (sorry guys, got to choose one or the other).
• CompanyCam (which I love) will assist with accountability issues, but the same is true of your W-2 employees.

Bottomline: I suggest only using 1099s to surge, not as a long-term plan.

For the record, we do not have any 1099s at BlueRecruit, so take that for what it’s worth.

Hope that helps, and good Luck!