Do you have employees or independent contractors?

Business owners (especially new ones) often look toward independent contractors to help complete their work. If you have an outside person who does an occasional project with you, independent contractor status is probably just fine.

But if you've got a person who is working regularly with you, often at your place of business, you must be careful when trying to pay them as an independent contactor. It's attractive to have a contractor, because the company doesn't have to pay payroll taxes or do a bunch of quarterly paperwork.

Unfortunately, many times these people should be legally classified as employees, not as contractors. The IRS takes a very hard line on this issue, mainly because independent contractors skip out on their tax responsibilities more often than companies do.