How should I pay my taxes

What is the name of your state? GA

I have a web based small business with one employee. Most of the work is outsourced. I'm wondering what would be the smartest way to file my taxes for the year. Should I itemize? Should my employee file w4, or 1099? Please help me.

When you have an employee, YOU must file quarterly employment taxes & withhold taxes from the employee's paycheck. I strongly caution you against declaring your employee to be an independent contractor to avoid having to deal with payroll issues -- it's becoming a favorite IRS audit target, & the penalties are nasty if you claim someone is an independent contractor & the IRS disagrees. Consult a payroll service. For a small fee, they can figure out your payroll issues & file your 940, 941, SDI, & state returns.