Often contracting labor makes sense for good reasons such as: specific skills may be required for a short-term project; more personnel may be required to get through a seasonal busy period; the company may not be financially able to attract top talent for an employer/employee relationship.

Needless-to-say but the best form of preparation is making sure that your books are always up to date. A monthly or yearly service from a professional tax consultant or accountancy firm goes a long way to being prepared for an audit.