don't claim they are you employees if they aren't. if they are are your employees then you should be giving them w-2's not 1099's, filing payroll tax returns, paying payroll taxes, and maybe other things like workmen's comp insurance if required by state law. that's all you have to do if ever audited by IRS is to say they're you employees, even if not. then the agent will dig into the situation and start asking a lot of questions about their status. if the IRS determines they are, your headaches are just starting and your bank a/c will be diminished.
