Today, many companies are bringing on temporary workers, 1099's, contractors, freelancers, and other types of workers to fill projects and skills. How do you classify them and pay them? That's a job for your CPA and attorney.
The Top 10 Payroll Mistakes are here. The top three mistakes are misclassifying nonexempt employees, failing to apply the latest laws/regulations and incorrect Social Security numbers on W-2 forms.
The IRS has a page that explains: "Independent Contractor (Self-Employed) or Employee?". Employers must way 3 factors about the degree of control and independence that a worker has:
"Does the company control or have the right to control what the worker does and how the worker does his or her job?"
"Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)"
"Are there written contracts or employee type benefits? Will the relationship continue and is the work performed a key aspect of the business?"
Consider carefully - and define it clearly - the relationship with any worker.