It can be very convenient to classify workers as contractors or 1099s.  That way you don’t have to pay taxes on payroll and you can usually get around workers’ compensation issues.  Make sure sure you know the rules before you tell all your employees they are now contractors.

How do I know when I can classify someone as a 1099?

The general rule is that an individual is an independent contractor if (the person for whom the services are performed) has the right to control or direct only the result of the work, and not what will be done and how it will be done or method of accomplishing the result.

People such as lawyers, contractors, subcontractors, public stenographers, and auctioneers who follow an independent trade, business, or profession in which they offer their services to the public, are generally not employees. However, whether such people are employees or independent contractors depends on the facts in each case. The earnings of a person who is working as an independent contractor are subject to Self-Employment (SE) tax.