Last Updated June 9, 2025
It’s essential for staffing agencies to correctly group employees into their respective classifications, one of which is corp-to-corp (C2C) employment. Come tax season, any errors involving worker classification and documentation can prove a massive headache.
C2C jobs are growing within the U.S., so it’s never been more important to have a good grasp of what C2C in staffing is, how C2C employment works, and how it differs from other classifications. In many ways, C2C has its own unique set of differences and challenges in comparison to hiring a full-time employee or working with an independent contractor.
Understanding Worker Classifications in the U.S.
There are three primary types of employees in the U.S:
- W-2 Employees
- 1099 Independent Contractors
- Corp-to-Corp (C2C) Contractors
These worker classifications are used to differentiate between permanent workers who receive a fixed salary and employer benefits (W2), freelancers or sole proprietors (1099), and contract workers who have their own incorporated company (C2C).
Understanding how the C2C meaning affects contracts, taxes, and other aspects of staffing will make these business relationships easier to manage as you fill your own clients’ staffing needs.
What Is C2C Employment?
Navigating the C2C employment meaning can be a bit confusing, especially when it comes to C2C in recruitment efforts. C2C is similar to working with an independent contractor, but instead of hiring the individual, the client instead makes a business agreement with the contractor’s incorporated company.
Because of this, a corp-to-corp arrangement is essentially a business-to-business (B2B) relationship instead of an employer-employee relationship. The individual who provides services is technically contracted through their own corporation. This is usually either an LLC or S-Corp.
C2C employment can be used by an individual contractor. Similar arrangements may also be used by staffing agencies. The staffing agency will make an agreement with the contractor’s business entity to have them work for the agency. In a C2C agreement, that individual is still considered an employee of their own company, even while they work for the staffing agency.
The C2C employer maintains responsibility for the employee’s taxes, benefits, and other needs. The agency only needs to focus on paying the individual’s business in accordance with their agreed-upon terms.
C2C vs. W2 Employment
There are several differences between C2C vs. full-time employment. C2C workers operate most closely to independent contractors. Clients are not responsible for a C2C worker’s taxes or benefits because this is viewed as a business-to-business relationship. C2C workers are typically hired for a specific project or task, usually one that lies outside the field of expertise of existing employees and outside the scope of the business’s typical activities.
As part of this, C2C workers have more freedom and flexibility regarding how they complete their work. They typically use their own equipment and set their own hours as they fulfill a project for a client.
W2 employees, on the other hand, are hired by a company to work part-time or full-time hours on a more permanent basis. Employers are required to withhold and pay taxes for these employees, as well as provide benefits for full-time workers. W2 employees are typically hired for activities that will always be essential for running the business. They offer much-needed stability for long-term operations.
W2 employees must be classified properly. Staffing agencies and other businesses could face fines or other penalties if a W2 employee is misclassified as an independent contractor. If an employer is able to direct and control the tasks, schedule, and methods an employee uses, they usually qualify as an employee rather than a contractor.
C2C vs. 1099 Employment
Choosing between 1099 vs. C2C employment is a common consideration for independent contractors, particularly because they share many similarities.
1099 employees are sole proprietors who don’t have an incorporated business. They are hired directly by other companies, usually on a per-project basis. This allows them to maintain flexibility over their schedule and workload. They can also usually charge higher rates for their services, which are often specialized in areas like IT or marketing.
At the same time, the business that hires a 1099 contractor does not have to provide benefits, nor do they need to pay any employment-related taxes. Those responsibilities (as well as other administrative responsibilities) fall on the contractor. The business that hired the 1099 contractor must provide a 1099-NEC form directly to the contractor.
While C2C employment is similar in some aspects (like flexibility and the ability to command higher hourly rates), there are a few distinct differences. By incorporating as an LLC or S-Corp, C2C workers are technically contracted through their corporation. Because of this, 1099 forms aren’t typically provided to a C2C employer, as the contract is made between two businesses.
Instead, the client pays the contractor’s business the same as they would another service provider. With this setup, the C2C worker can potentially draw a W2 salary from their corporation, or use a pass-through payment setup. This can reduce their individual tax burden, but their corporation will still be responsible for employment taxes. Because different business structures can influence taxes and other obligations, it’s important that C2C workers consult with a tax professional as they set up their business.
C2C Rate Calculator
For many individuals, the decision to work on a C2C basis comes down to their earning potential. This W2 vs. C2C rate calculator makes it easy to compare earning potential by inputting W2 salary and C2C hourly rates and then estimating yearly revenue and taxes to determine net income.
Depending on a C2C worker’s hourly rate and their ability to find consistent work, their take-home earnings can be significantly higher than they would be through traditional employment.
In-Summary: C2C in Staffing
As part of the required documentation when setting up your staffing agency, it’s important that you consider C2C workers and how to set up their contracts. Talented C2C workers can be a cost-effective asset for staffing agencies as long as you understand the nuances of setting up contracts with their companies. When used properly, C2C employment can help your agency’s bottom line as you fill your own contracts.
C2C in Staffing FAQs
What is C2C consulting?
C2C consulting is a type of B2B relationship where the client hires another company (such as a staffing agency or an individual contractor’s LLC) to provide services. Rather than hiring employees, the client contracts with the C2C consultant to receive services from its independent contractors.
What does C2C stand for in employment?
C2C in U.S. recruitment and employment stands for corp-to-corp. This refers to a contract agreement where workers provide service through their own corporation (such as an LLC) instead of being hired directly as an employee or independent contractor.
What is the difference between C2C and contract-to-hire?
In C2C, a business contracts with the C2C employer rather than directly hiring the contractor. The C2C employer manages the contractor’s taxes and benefits, and the contractor works for the other business on a project basis. With contract-to-hire roles, an individual is hired by a business as a contractor for a set period, with the potential of becoming a full-time W2 employee at the end of their time as a contractor. C2C vs. C2H (contract-to-hire) ultimately comes down to what the business prefers.
Michael McCareins is the Content Marketing Associate at altLINE, where he is dedicated to creating and managing optimal content for readers. Following a brief career in media relations, Michael has discovered a passion for content marketing through developing unique, informative content to help audiences better understand ideas and topics such as invoice factoring and A/R financing.
