SUB-CONTRACTING - Sub-contracting out certain jobs for your business is more important today than ever. Businesses can no longer afford a large staff due to payroll expenses, benefit costs, insurance costs and even the floor space to house staff. Using 1099 contractors is one of the best ways in today's world to reduce expenses tremendously. Because the sub-contractor takes care of his own insurances, taxes, supplies and more this saves your business thousands of dollars each year. You only pay for the services needed. Using sub-contractors where ever possible, including your bookkeeping/accounting department, equals huge savings for your company!
IRS definition for Independent Contractors:
"You are not an independent contractor if you perform services that can be controlled by an employer (what will be done and how it will be done). This applies even if you are given freedom of action. What matters is that the employer has the legal right to control the details of how the services are performed."
Using subcontractors that have their own businesses insures you are in compliance with the rules of the IRS.