Barbara Shrager has just one employee, but you'd never know it. When a major client recently requested a new creative concept for an advertising campaign, she rallied four "virtual" employees to develop sketches. Within days she had culled the best work from 30 submissions. "I can offer my clients a variety of different styles, even though I'd never be able to afford several designers and copywriters on staff," says Shrager, president of Attainment Marketing Partners, a New York City company that does marketing consulting, advertising, design, and public relations.

Shrager has had six virtual, or contract, employees for three years and believes she has a handle on how to avoid the potential pitfalls of such arrangements. She makes it clear -- through a written vendor agreement -- that her company owns all the work produced and that the vendors won't solicit clients they've worked for through Attainment Marketing. And she starts everyone out on small projects and makes sure that all work flows through her company and not directly to the client. "I also have to be very careful about regulations," Shrager notes. To make sure she doesn't run afoul of IRS rules for outside contractors, she might specify in a retainer agreement that income from her company is expected to be no more than, say, 10% of the contractor's total income and that she doesn't "manage their time, and they don't work on my premises." The setup allows Shrager to offer her clients the benefits of working with a larger firm, but without the overhead. "It makes me seem bigger than I am and better staffed than I can afford to be," she says.

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