Hi there, if you are landing on this page, either you are already in united states who is trying to get familiar with these employment types aka tax terms or you just started working in a US based staffing company.
However, we will discuss what is corp to corp basis in us staffing and in general as well.
There are three major employment types which are widely practiced in USA.
- Corp to Corp
Before getting there, its important to know about W2. Indeed, it gives us a better insight to understand what is corp to corp basis.
1) W2: Any entity, organization or a body who is paying salary to the candidate for the work done is known as employer. An employer source their candidates to clients on contract basis.
Let us call “ABC” is an employer.
If “ABC” is running the payroll of a candidate i.e. paying the salary for him or her, therefore the candidate/consultant is said to be ABC’s W2.
Candidate, consultant, and employee are all same. Let that sink in.
2) Corp to Corp: Corp to Corp basis is also referred to as corporation to corporation or c2c basis in short terms.
In this case, candidate is referred to as a c2c contractor.
First, let us see the structure. There will be an employer, vendor, and client.
Now, let us take some examples for better understanding.
- Let the Employer be “ABC”. An employer (ABC) is responsible to market their candidates and get them placed at client site through a vendor.
- Let the vendor be Randstad company. Vendor is the one who help candidate to get the job at the client site. A vendor can have multiple clients.
- Assume that the client is google here. The place where you work is called client.
If ABC’s candidate is working at google through a vendor Randstad, then the candidate is said to be working on corp to corp basis.
Because here the contract is between two corporations i.e. Employer (ABC) and Vendor (Randstad). Therefore, candidate is referred to as c2c contractor.
Payment cycle: Client -> Vendor -> Employer -> Candidate.
It is the (ABC) Employer’s responsibility to pay their employee on timely basis irrespective of the functioning of payment cycle.
Note: In some countries employer and vendor both are same. There is no third party (employer).
Ex: Randstad (Employer and Vendor) -> Google (Client)
Here, Randstad source candidates to google and they are responsible for paying the salaries to the candidates.
3) 1099: 1099 contractors are also known as independent contractors. They do not have employers and are free to work with anyone.
Unlike w2 and c2c contractors, an independent contractor will work for himself or herself only and get the payments directly from the client.
They should be compatible with some rules and regulations and must have registered themselves as a 1099 contractor to work independently.
However, Corp to Corp contractors are large in numbers across USA.
Hope you have figured out what is corp to corp basis in US Staffing.
Please let us know your opinion in the comment section below.