Be careful in how you classify workers. Most people who work for you are likely to be employees and not independent contractors. But if you treat someone as an independent contractor and the Internal Revenue Service determines that he or she is really an employee, you may have to pay some big tax penalties.The IRS much prefers that businesses treat workers as employees. Why? Because the IRS believes it will take in more tax revenue that way. The belief is that independent contractors often avoid paying income tax, as well as the self-employment tax that covers Social Security and Medicare.
