The Internal Revenue Service offers the top ten tips businesses should know in hiring independent contractors, as part of its Summertime Tax Tip series.

The IRS says it uses three characteristics in determining whether there is an employment relationship versus an independent contractor: Behavioral Control (who has a right to direct or control how the work is done through instructions, training or other means), Financial Control (who has a right to direct or control the financial and business aspects of the worker’s job), and the Type of Relationship (how the workers and the business owner perceive their relationship). Employers who misclassify workers as independent contractors can end up with substantial tax bills. Additionally, they can face penalties for failing to pay employment taxes and for failing to file required tax forms, the IRS says.

Hawaii employers should also refer to the state’s Dept. of Labor and Industrial Relations analysis on independent contractors.