Our company recently began sub - contracting IT professionals to clients . I was planning on adding those sub - contractors to our payroll . However , I was given the advice that doing so is a bad idea since , in the event of an audit , it would make them appear as employees . Is that true , IE , should I keep sub - contractors out of our payroll system ? If so , what is the best way to pay them ( electronically ) that minimizes risk of reclassification to W2 ? Thank you .