Anyone who performs services is an "employee" if the one for whom services are performed can control what will be done and how it will be done. This is true even when you give the worker quite a bit of freedom of action. What matters is that if you have the legal right to control the method of the services — the how, when, and where — rather than just the results, the individual meets the IRS common law rule and is going to be considered your employee. If not, the individual is classified as an independent contractor and is not your employee.

Here are some things you can do to help ensure that you or those who work for you qualify for independent contractor status, and that you can win any challenges to your arrangements:

Using independent contractors offers employers significant tax and nontax advantages. Since employers are required to pay certain benefits and taxes on behalf of their employees, the financial benefits of having a large independent contractor work force can be significant.

Independent contractors work for themselves — they are treated as if they are running their own business. Thus, you are not the employer of an independent contractor, and you aren't liable for payroll taxes or benefits for them, nor are they protected by workers' compensation or most labor laws.

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

If you are considering leasing employees, make sure you take these steps along the way to be certain that leasing is the right option for you.

Traditionally, temporary help firms have been useful when you need a replacement for a full-time employee who is away from work for vacation, leave of absence, or illness. But temporary help may be what you need to fill your more long-term needs.

Leasing employees is different from using temporary workers in that it generally refers to a situation where a third-party business "employs" your staff — including doing payroll withholding, administering benefits, etc. — and you pay them a fee plus expenses to do it. In many cases the leasing agency simply takes over your existing staff of permanent employees, and there's little change in the actual makeup of your staff. Leasing is usually not an option for the one- or two-person shop, since most employee leasing companies aren't interested in such "small fry." But if you have at least a dozen employees and you don't have the time or expertise to be a human resource manager, leasing might work for you.

If you hire your children to work in your business, either full-time or part-time, you could be eligible for special tax breaks.

Part-time employees can be a great compromise between full-time employees and nonemployee staffing solutions. They allow employers to have control over the employees' work, but generally they cost less because these people work fewer hours and, as a rule, don't get as many costly benefits as full-time employees. In some cases you can hire part-time hourly workers and ask them to work more or fewer hours in any given week, depending on how much work you happen to have.

Hiring an employee is truly making an investment in your business. When you hire someone to work for you, you will invest time, money, training, and trust. If you do it right, your business can move forward much faster than ever before; if you do it wrong, not only can you lose your investment, but you can be subject to lawsuits that can cause you to lose much more.

When the work gets to be too much, you may find yourself toying with the idea of adding staff to help out. But do you really need help? First, ask yourself if you need to hire someone or just be better organized. If you're having trouble getting organized, try local libraries, community centers, or colleges for information or seminars on time management.

Don't assume that an employee must work a 40-hour week to qualify as full-time. The definition of "full-time" varies, depending on which law you're looking at. However, in many cases a person who works at least 30 hours a week (1,500 hours a year) will be considered full-time. In some cases, a person who works at least 75 percent of the average number of hours that are customary for an employee in that particular position must be considered "full time."

Chances are if your business becomes successful, it will grow and, at some point, you may need some help on a temporary or permanent basis.