Know Your ABCs

Before hiring independent contractors, consult first with a lawyer who's well-versed in the rules everywhere for federal and state-worker classification laws because they vary widely.

There are some states where independent contractor relationships are subject to the "ABC test" where you show that:

a.) the contractor's work is not under your company's direction and control

b.) it is outside the course of your company's usual business

c.) the contractor has an independent business to do that work

Hiring independent contractors instead of employees can save you 15 to 30 percent on payroll taxes and benefits, however if you are caught misclassifying whatever you have saved will be obliterated from what you'll owe in back taxes, benefits payments fines, and federal penalties.

Mitigate ...