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Independent Contractors

Another popular approach to having a work force only when and if you need it is to use independent contractors.

With independent contractors, it's possible to have personnel to work on (or off) your premises without becoming subject to payroll taxes or to many state and federal employment laws. Traditionally the government does not favor treating workers as independent contractors, so there are several complex federal tests involved to make sure that the person actually qualifies as an independent contractor.

Many consultants advise companies to contract out any function that is not directly related to the production of the company's core products or services. For example, many "white collar" businesses contract out their building maintenance work or food service functions. Independent contractors are particularly useful when you need a specific skill or technical knowledge for a special project that's expected to last a relatively short length of time.

The Business Tools area includes a sample independent contractor agreement.

If you think using independent contractors might fill the bill, consider the following:

• What, exactly, is an independent contractor? Which job categories might lend themselves to such treatment?
• What are some pros and cons of using independent contractors?
• What are some tips for successfully using independent contractors?