Declaration of Independents

You may decide your business can't afford to hire too manyfull-time employees, and you'd like to use the services of anindependent contractor. With an independent contractor, youdon't have to deduct and withhold the person's income,Social Security and Medicare taxes.

While independent contractors mean lower payroll costs, beadvised that the IRS scrutinize this whole area very carefully. TheIRS wants to make sure your workers are properly classified andpaying the government the necessary income and payroll taxes thatare due.

Excerpted from Start Your Own Business: The Only Start-Up GuideYou'll Ever Need