When to Employ, When to Contract

The issue of whether to hire additional employees or independent contractors is an important one for small business owners. "The Road to Independents" on BusinessWeek online includes some issues to consider, as well as a brief discussion about the tax consequences of mis-classifying employees as independent contractors. If you work with a lot of independent contractors, you should speak with your attorney to ensure that they are properly classified as independents and that they have not crossed the boundary into employment. Making this mistake could cost you more than tax penalties - you could also run afoul of labor laws - and could be very expensive.