I can hear it now, "What?? All this time you and others have been telling us about the benefits of hiring virtual assistants and now you tell us there are pitfalls?" I feel like the old Endust(r) commercial "And now Pledge(r) says to watch for build-up?" It's as true with hiring virtual assistants as it is with anything else - there are common pitfalls and you, as a consumer, must be aware of and you must protect yourself.

Unfortunately, as the industry grows and as more and more people "think" they can be virtual assistants; bad apples are bound to pop up. Our company alone has seen an increase from 500 VAs in 2003 to 18,000+ currently and growing at a rate of about 200 per week. So let's talk about the pitfalls and how you can avoid them and protect yourself.

But, But, But, I Must Be An Employee!

If you've only heard one thing about virtual assistants and the benefits of hiring them it is that they are supposed to be independent contractors. I recently read a blog post that claimed that "eventually companies would be required to bring virtual assistants on as employees rather than independent contractors." I just had to laugh! How in the world can someone who self-directs how they do the work be considered an employee? And as a business owner you don't want employees. That's why you hired or are considering hiring a virtual assistant in the first place. You didn't want the employee "I want" and "I deserve" mentality.

I disagree 100% with the opinion of the blog post that claimed virtual assistants will need to be employees. There's no need for them to be employees. Here are some of the items that you and I, as consumers, need to do to ensure that we set virtual assistants up so we are NOT ever required to set them up as employees.

• W9. When you contract a virtual assistant, always ask that they complete a W9 (tax reporting form) and send it to your company BEFORE he or she begins working. This form will give you the virtual assistant's social security number or EIN number and information for tax reporting purposes.

• EIN a.k.a. Employee Identification Number a.k.a. Federal ID number. As an added line of defense, you should ask every virtual assistant or contractor you hire to obtain an EIN from the government. This number alone shows that they are operating as their own entity and not as an employee of your company. They may be Jane Doe d.b.a. Jane Doe Virtual Assistants but it strengthens the argument that they are not employees but rather entities in and of themselves and will keep you out of hot water with the state's departments for employee relations. The virtual assistant can obtain an EIN online in about 5 minutes and it's free.

• Contract. Anyone and everyone who hires a virtual assistant must have a contract executed between your company and the VA. The contract should spell out the relationship (that of a contractor and not an employee), the duties (what will she be doing for you and what will you do for her), the rate of pay (what are you going to pay him), where are any arising court battles fought, and so on.

Oh Tax Man!

Because a virtual assistant is set up as an independent contractor, you do not need to withhold state or federal taxes, 401(k), Medicare, FICA, or any other employee-related acronym. As an independent contractor, a business entity of their own, it is up to the virtual assistant to obtain his or her own retirement plan, medical insurance, file quarterly and yearly taxes, etc.

However, be absolutely sure that you send the virtual assistant a 1099 Miscellaneous Income tax form (in lieu of a W2, which employees only receive) each year.

Shhhhh…Don't Tell!

The last thing you want to happen is for a virtual assistant to walk away with your company's important information if the relationship turns south. It is absolutely imperative that you have your attorney design a non-compete/non-disclosure agreement and then make sure your virtual assistant signs and returns the agreement before beginning any work for your company.

In my next article, Avoiding Virtual Assistant Performance Pitfalls, we'll go over the things you need to be aware of and look for in the virtual assistant while hiring - the non-regulatory things.