It will surely depends on where you are located. In Canada, you can ask the 2 employees/contractors to provide you a bill like any company does when they sell services to customers and you can pay them by check. The employee/contractor would need to be registered as a company (incorported or registered on their names, it doesn't matter). Expect to pay sales taxes if you go this way but you won't have any "employee paperwork" to do.
Regards,
Erik
For insurance purposes your going to need to do more than that. Not only that but you can leverage their more formal relationship with your venture for marketing purposes. A contractor by law cannot be told what to do to get their job done, so consider that when making a decision and training. You could cut them a check but that's not something anyone would recommend. If you would like some help with your marketing please don't hesitate to contact me through www.unthink.me - Humberto Valle, Spcialized Small Business Marketer
If you have individuals or businesses working for your company in a capacity as an independent contractor, it is a best practice to have a written independent contractor agreement that lays out the terms of the agreement. A written agreement helps to corroborate your position that these individuals are independent contractors and not employees of your company. From a U.S. tax compliance perspective, there are IRS reporting obligations for these payments. If you pay a contractor nonemployee compensation that exceeds $600 during the year, you must file a Form 1099-MISC which reports the compensation. In order to accurately complete the Form 1099-MISC, the individual should provide you with a completed and signed Form W-9. Typically the Form W-9 is completed and signed contemporaneously with the signing of the independent contractor agreement.
