Freelancers and business owners are not guaranteed to make money for their efforts. Employees have a contract that promises them compensation for their labor. This steady stream of income makes budgeting and saving easier.

Employees are also often offered benefits like health insurance and retirement packages. Most of the time, their company goes in on these services with them in order to offset some of the cost. Any freelancer can attest to the high cost of private health insurance and saving plans. Employers often offer these services as further incentive.

More Advantages of Receiving a W-2

Though a W-2 employee may not be completely free to choose how and when they work, they are offered several advantages. Working as a W-2 means simplified tax filing with the employer withholding estimated taxes, as compared to managing your own taxes as an independent contractor and having to file quarterly tax estimates. A W-2 is not only useful for filling out one's taxes (although it is most suited to this purpose). Many government and private agencies accept the forms as another form of identification. The document will always list the employee's social security number and full name, so it can be used in conjunction with a photo ID to prove one's identity.

Some loan companies and retailers who offer credit will also accept a W-2 as proof of income. This was more convenient before the era of digital banking, but the old paper method of proving employment is still used by some companies.

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