As a dental practice owner, staffing decisions go far beyond who to hire — they also include how to properly classify your team for tax and payroll purposes. One common question we hear from dentists is:
“Should this person be a W-2 employee or a 1099 contractor?”
The answer depends on how the work is structured — and understanding the difference can help you build a stronger, more efficient team while keeping your practice in good standing.
W-2 vs. 1099: What’s the Real Difference?
At a glance, here’s how the two classifications compare:
| W-2 Employee | 1099 Contractor | |
| Work Control | You control how, when, and where work is done | They control how and when work is done |
| Tools Provided | You provide tools, software, and systems | They use their own tools and processes |
| Exclusivity | Usually works only for your practice | Often works with multiple clients |
| Tax Withholding | You withhold payroll taxes and issue a W-2 | They handle their own taxes and get a 1099 |
| Benefits | May be eligible for benefits you offer | Not eligible for employee benefits |
Why This Matters for Dental Practices
In a dental office, most team members — from dental assistants to office managers — will fall into the W-2 category, because you control their schedule, provide their tools, and they’re integrated into your day-to-day operations.
Even if someone is working fewer hours, or remotely in a limited role (like handling billing), they’re likely still considered a W-2 employee if:
- You determine their responsibilities and hours
- They only work for your practice
- They use your systems or tools to do the job
Shifting hours or location doesn’t automatically change their classification.
When a 1099 Contractor Makes Sense
In some cases, bringing in a 1099 contractor is the right move — especially when the work is project-based or specialized. For example:
- Outsourced billing or bookkeeping
- IT and software support
- Marketing or website services
- Temporary or locum tenens dental providers
- Specialists selectively working in a general practice office
These professionals typically run their own business, offer services to multiple clients, and manage their own schedules and tools.
Questions to Ask Before Deciding
To determine the right classification, ask yourself:
- Who controls how the work gets done?
- Does this person use our tools or their own?
- Are they working only for us or serving other clients, too?
- Are we setting their hours or are they setting their own schedule?
If you’re answering “yes” to most of the first set of questions, W-2 is likely the right path.
How to Set Things Up the Right Way
If you’re creating a new role or updating an existing one, here’s how to ensure everything is structured clearly:
- Create a written role description or contract
This helps clarify duties, expectations, hours, and communication processes.
- Use the correct payroll process
Whether you’re running payroll in-house or through a provider, make sure the classification matches how the work is structured.
- Maintain consistency
If someone is truly a contractor, treat them like one — don’t manage their day-to-day tasks the same way you would with an employee.
The Bottom Line
Understanding the difference between W-2 and 1099 classification helps you build a team that works for your practice — operationally and legally. When you set roles up correctly from the start, you reduce confusion, simplify payroll, and give everyone clarity about their responsibilities.
Need help reviewing your team structure or drafting clear role descriptions? We’re here to help you get it right — and keep it simple.