Thanks in advance for taking the time to read my post. I am a partner in a small business with approx. 15 employees. When I 'bought into' the business, I was, and still am, quite uneducated about the tax end of the business... I am in charge of the day-to-day operations. I was told that at the end of the year, we 1099 our employees (who provide athletic instruction in the form of clinics, camps, lessons, etc... ) and it is their responsibility to claim their earnings. Each employee, who are all part-time, signs a contract acknowledging that we do not deduct taxes and it is their responsibility.

Is this correct? If so, do we supply the forms or do they simply claim their earnings?
Is this the best way to run a small business? (an employee can earn $5k - $15k)?

Any suggestions, advice, help, guidance is greatly appreciated. Thank you.

It depends on the nature of your business and the level of supervision.

There is an extensive checklist available that the IRS uses to determine if your independent contractors are in fact employees. Download that list and work through it with your partner.

If one of your contractors ever challenegs his status, you must be ready to defend your decision before the IRS.