Interesting question. If you have a small construction company and you hire people as you need them, the question of whether the person is an employee or an independent contractor is this: does the person you hire have a specific scope of work for which they are responsible without regard to your regular supervision. If they work independently and follow a broad scope of work (oral or written) and your payment is for an outcome (finished product) as opposed to labor, then the person can be treated as an independent contractor. But, you should, to protect yourself, enter into a simple independent contractor agreement with each person you and make sure that they sign a W-9 up front. Make sure that the agreement has the following language: The contractor is an independent contactor responsible for performing the assigned scope of work in a professional manner within the time specified. By performing the work required by this Agreement, contractor shall not be or act as employees of the company within the meaning or application of any Federal or State unemployment insurance law or other social security or any workers' compensation, industrial accident or other industrial or labor law. The contractor, at its own expense, shall comply with such laws and shall assume all obligations imposed by any one or more of such laws with respect to this Agreement, including payment of all required Federal, State, and local taxes and contributions. And, of course, issue the 1099.

Thanks, Jim

@petrosianii If you feel you cannot determine whether someone is an employee or an independent contractor, you can fill out a SS-8 Form from the IRS and they will help you determine the proper status. JimD

A new article was just posted Reporting Independent Contractors Compensation: A Guide to the IRS 1099 Form

Yes it does. Thanks, Lucy. Having studied your ezine article again, I looked at each criterion on there, and compared it to what we do at Gnosis Arts. The preponderance of the evidence suggests that what I have are independent contractors. 6 of the items DO apply to my staff, and 14 of the items do not. I guess that means I need to consult with an employment lawyer? :)

Thank you for your comment, Eric. Regarding your question, an ongoing relationship means that an employee usually is hired for a continuing, indefinite period. This generally applies even to work performed on an irregular but recurring basis, as well as to part-time, temporary, and seasonal work. A typical independent contractor works by the job. But, if someone does have a relationship as the one described above, it still doesn't automatically mean that he or she is an employee. It is not any single criteria that tells you whether the relationship is one of an employee or an independent contractor, but rather a combination of all of them. For example, many small businesses have outside bookkeeping firms doing their books on a regular, monthly basis. It is also an ongoing relationship. I have an ongoing relationship with the clients who hired me as a part-time controller to review their financials every month. Same goes for annual tax preparation services or external legal services. Some lawyers have been with their clients for years. In most cases they have annually renewing contracts, but sometimes that's not even case and there is no set end to their appointment. You have to then take all the other rules into consideration. And when you see that these service providers meet the majority of the remaining criteria, there will be no doubt as to what role they play. Hope that helps.

Your EZine article is really good, Lucy. Just left a comment for you there. Also had a question which you'll see once you moderate the comment. Thanks.

Yes. This is really good info. I just found this out, too, not long ago, about the $600 threshold and the W-9, and 1099. But we're on top of it this year!

Thanks for jumping in with that resource, teamextension! For more information, read this Business.gov article, '5 Things to Know about Hiring Independent Contractors'

Please take time to read the 'Independent Contractor (Self-Employed) or Employee?' page from the IRS. http://www.irs.gov/businesses/small/article/0,,id=99921,00.html If you hire them on demand, and they work as independent contractors, you can give them a 1099. Your subject said 'employees'. Employees get a W2 and not a 1099.