If he makes a dollar and is under your direction or uses your equipment, he is an employee, not a subcontractor, and as such, you are required to take out taxes and all of that government stuff.
Workers comp insurance is different and varies by state. It is a great idea to obtain a policy no matter if it is just you working. If you are working on a commercial property, you are usually required to have a policy in place. Otherwise, if something happens to you or an employee while on their property, you could, in a sense, make a claim on THEIR policy.
in MY state, i do not have to have a policy unless I have 3 employees, but I can assure you, I haven't gone a DAY without a policy with someone in my employ. Thats just asking for trouble. Wait till someone gets hurt on the job...
By the time you can make ends meet....They move the ends.