A lot of them are "employee in name only" contractors. Doesn't mean much. I've done it myself. There are tax implications when you get 1099'd, as long as you go in eyes open it'll be OK. Don't forget to file your quarterly estimated payments, the IRS isn't amused if you skip one.

There's a lot of talk on HN about the natural evolved tribal size of human orgs being only XYZ people so when we inevitably have a larger than XYZ group its epic fail. Well... it goes the other way too, and its quite possible that natural evolved civilization etc requires more than 2 guys on a "tribe" long term. It doesn't have to be the end of the world or apocalyptic, merely suggesting encouraging microfirms might not be a wise policy decision.