Before you determine how to treat payments you make for services, you must first know the business relationship that exists between you and the person performing the services. When an employer hires someone, he/she must decide if the person should be classified as an independent contractor or an employee. Many employers want to hire people as independent contractors so they do not have to pay any benefits; however, this may not always be appropriate. It is important that you read the short guide to be downloaded below. For every person hired as an independent contractor, the business owner should have on file the form in the guide, which demonstrates that the person fits the profile of an independent contractor, rather than an employee.