As a small business owner, it is very important to make sure that you are classifying your independent contractors correctly on your taxes. It can be confusing and hard to remember when it comes to employees versus independent contractors, since they often do the same work and get paid similarly. However, the IRS does not see it that way, and you can get into some serious trouble if you report your contractors incorrectly. According to the IRS, the difference is : “In general, someone who performs services for you is your employee if you can control what will be done and how it will be done.” (Find more about the IRS policies on independent contractors here.