I run my own business and made the decision that it would be cheaper for me to ask workers to do subcontracting instead of paying all those taxes. I will be leasing my equipment to this person weekly. I was told that if a person spends more than 20 hours a week inside your business, doing services for you, then they will be considered employees. The employees have agreed to accept the 1099 instead of being unemployed. Is there a limit on the time they can work inside our building or does it matter as long as they write you an invoice and you lease the equipment to them. I'm confused...

The question of whether a certain individual is an employee (W-2) of your business, or is an independent contractor (1099) is not one for which any hard-and-fast, black and white rules have been written. Instead, it's a judgment call that is situation-specific, and which uses certain guidelines that the IRS has established over the years.

Start here... Independent Contractor (Self-Employed) or Employee? (http://www.irs.gov/businesses/small/article/0,,id=99921,00.html)

... for a quick overview right from the horse's mouth. At the bottom of that page you'll find some links that'll take you to more detailed resourses, if you choose. You'll then evaluate your particular situation in light of these general guidelines, and decide if your people arguably qualify as independents.

Best of luck!