Avoid Treating Independent Contractors as Employees

To avoid fines and penalties from the IRS, use independent contractors for specific projects, not on an ongoing basis. Do not assign the contractor work that falls outside the project he or she was engaged to perform.

Document your communications with independent contractors: when you contact them, the scope and duration of the project, and the frequency of your communications with them. You should also document when they turn down a job with you. This documentation will provide evidence that the independent contractor is not "on-call" for your company, and that they provide their services to other companies besides yours.