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Avoiding Risky Business

You take a lot of risks as a home business owner. Generally, having a client hire you isn't considered one of them. But two common mistakes in taking on clients can result in reduced payment, the potential for being involved in legal action, and even business failure. Avoid making these mistakes:

• Misunderstanding the difference between working as an independent contractor and an employee. Gratefully, the IRS provides us with a lot of information to help eliminate such confusion.

• Agreeing to work for bad-risk clients who are unlikely to pay. Avoiding this mistake requires using your discretion and qualifying clients.

In the sections that follow, we'll go over the general rules for both situations, so you don't end up doing ...