The short answer
In W2 IT staffing, the consultant is an employee of the staffing firm, which handles payroll and tax withholding. In corp-to-corp (C2C) staffing, the consultant works through their own or their employer's company, which invoices for the work and handles its own payroll. The right choice depends on your vendor policies, compliance requirements, and the role.
W2 contract staffing
Under a W2 arrangement, the staffing firm employs the consultant and places them with your organization. The firm runs payroll, withholds income and payroll taxes, and issues the consultant a Form W-2. You pay the staffing firm an agreed bill rate.
- The staffing firm is the employer of record
- Payroll taxes and statutory insurance are handled by the firm
- Benefits, where offered, come from the firm
- Often preferred by employers that want a simple, single vendor relationship
Corp-to-corp (C2C) staffing
Under C2C, the contract is between two businesses: your organization or your staffing vendor on one side, and the consultant's corporation or employer on the other. That company invoices for the work and is responsible for paying the consultant and handling its own taxes.
- The consultant's company handles its own payroll and taxes
- Common when consultants run their own corporation or work for another consulting firm
- Some organizations restrict or prohibit C2C in their vendor policies
- The contracting company's insurance, compliance documents, and work authorization arrangements should be confirmed
C2C is different from engaging an individual as a 1099 independent contractor. Worker classification rules are complex, so confirm the structure with your legal and HR advisers.
Contract-to-hire
Contract-to-hire starts as a contract, usually on W2 terms, with the option to hire the consultant as your employee later. It lets both sides confirm the fit before a permanent offer. Conversion timing and any conversion fee should be agreed in the original terms.
Direct hire
In direct hire, the staffing firm helps find candidates and you employ the person from day one. It suits permanent roles where you already have budget and headcount approval.
How to choose
- Vendor policy: does your procurement or HR team allow C2C?
- Duration: is the need for a project, an extended period, or permanent?
- Risk: who should carry employment and tax obligations?
- Speed: how quickly does the role need to be filled?
- Conversion: might you want to hire the person permanently?
What to prepare before you request talent
- Role title, responsibilities, and required skills
- Seniority and must-have experience
- Location, time zone, and remote, hybrid, or on-site arrangement
- Start date and expected duration
- Engagement types you accept: W2, C2C, contract-to-hire, or direct hire
- Budget or rate range, if available
This article is general information, not legal, tax, or immigration advice. Employment and contracting rules vary by state and situation, so confirm your approach with qualified advisers.