What is C2C (corp-to-corp)?

How does a C2C engagement work?

The consultant is an employee or owner of a company — their own single-member LLC or S-corp, or a staffing agency that employs them. That company signs a contract with the vendor or end client and invoices for hours worked. Payment flows business to business.

The consultant is never on the client’s payroll. Their employer of record handles payroll taxes, benefits, and — critically in IT staffing — immigration sponsorship where it applies.

How is C2C different from W2 and 1099?

On W2 the worker is an employee of the staffing agency, which withholds taxes and typically provides benefits. On 1099 the worker is an independent contractor paid as an individual, responsible for their own taxes. On C2C the relationship is between two companies, and the individual is an employee of one of them.

The tax term changes the rate maths substantially: a C2C rate has to absorb employer taxes, benefits, and overhead that a W2 rate does not, so the same take-home implies different headline numbers.

Why is C2C so common in US IT staffing?

Because of layering. An end client hands a requirement to a prime vendor, who subcontracts to a tier-two vendor, who subcontracts to the agency that employs the consultant. Each hop is a company-to-company contract, and C2C is what makes that chain legally and operationally workable.

It also matters for work authorization. Consultants on H1B must be employed and sponsored by a specific company, which rules out 1099 arrangements and makes C2C the natural structure.

What goes wrong with C2C?

Two things, repeatedly. First, rate confusion: comparing a C2C rate to a W2 rate without adjusting for burden makes one of them look far better than it is. Second, right-to-represent collisions — with several vendors distributing the same role, a consultant can be submitted twice to the same end client through different chains, which usually disqualifies them.