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Independent Contractor Contract
An independent contractor contract can be used in a variety of industries for anyone who is a freelance or 1099 worker.
Working with an independent contractor may seem simple enough. There’s no complicated paperwork like there is with an employee — all you need to do is shake hands and get started, right? Not quite.
Just like any business relationship, it is very important to communicate and detail the terms under which you’ll collaborate to prevent a dispute. Before beginning work with an independent contractor, you should consider having him or her sign an independent contractor contract.
An independent contractor contract, also called a 1099 agreement or self employed contract, is an agreement between a professional and a client who is willing to pay for their services. In accordance with the Internal Revenue Service, or IRS, an independent contractor is not a staff member and, for that reason, the client is not responsible for his or her tax withholdings.
Read on to learn more about independent contractor agreements and how a DIY business contract from Concierge Contracts can help protect your business.
1099 vs W2 Employee
1099s and W-2s are two of the most commonly-used tax forms utilized to subtract payroll taxes on various types of staff members. Before hiring someone to work with you, it’s important to understand the distinction between the two.
1099 workers are considered self-employed independent contractors. They get paid according to the terms of their agreement and receive a 1099 form to report earnings on their tax return. Conversely, a W-2 worker earns a routine wage and benefits. The company or joint venture withholds taxes from the worker’s income and has a substantial degree of control over the employee’s work.
What Is a 1099 Employee?
Let’s dive a little further into what exactly classifies a worker as a 1099 employee. According to the IRS, a 1099 employee, or independent contractor, supplies particular services as specified by a signed agreement. Some 1099 employees work on only one task at a time, but many serve several clients, supplying services within their expertise. Independent contractor professionals, such as freelancers and specialists, are self-employed, so they themselves are considered business owners.
The majority of the time, companies hire W2 workers with the objective of working with them for an undetermined length of time. On the other hand, companies engage with independent professionals for a specified amount of time, per the conditions laid out in the agreement.
No matter the length of their contract, a person with an independent contractor status independently determines how and where they work, and what tools and approaches they utilize to complete the job they have been hired for. The contractor party may likewise choose to hire their own workers to help them provide the work, product or services that you hired them for. Simply put, independent contractors are liable for their own profit or loss when they perform their tasks
Because your level of oversight over independent contractors may be lower than that of regular employees, the financial and legal responsibility you hold over the worker will be lower too. 1099 employees are responsible for paying 100% of their Social Security and Medicare taxes, so if you hire an independent professional, your company is not required to pay their payroll taxes. Additionally, as business owners, 1099 employees aren’t qualified to receive the benefits you may provide your W2 staff members, such as medical insurance, paid time off, and overtime.
Why You Need an Independent Contractor Agreement
If you’re asking yourself, “Do I need a contract?” the answer is most likely yes. An independent contractor agreement is essential whenever you work with an individual or organization to carry out a particular job with a clear start and end date. An independent contractor agreement helps the business and the contractor to write out and come to a consensus on the expectations from either party and why the professional is not considered an employee for legal and tax purposes.
Without this contract, the client risks holding the legal status of an employer in the eyes of contractor laws and the IRS. Our customizable contract template clearly establishes that the individual or entity is not an employee.
This agreement may also help secure your business interests. In addition to describing precisely what work needs to be finished, when it needs to be completed, and how much you are going to pay, it guards you against liability concerns and helps secure your assets and confidential information. If you are taken to court, you have the signed contract to clearly show the judge what your expectations were. You might also need to have a copy of the entire agreement if you are investigated by the IRS.
What Should Be Included in an Independent Contractor Form?
Similar to a general contractor contract or other types of business agreements, an independent contractor agreement clearly defines the terms of a business relationship between a company and an independent professional. Some standard components of this type of contract include:
- Who is being hired and by whom
- What type of services will be offered
- When the relationship will start and end
- Why the professional is not a staff member
- How the professional will be paid
Additionally, this contract might detail other legal terms surrounding binding effects, expenses, governing law, severability, indemnification, warranties, written notice stipulations, and insurance. Our DIY independent contractor agreement on our marketplace will help guide you through these terms and customize them to fit the needs of your business relationship.
Independent Contractor Agreement Template
Is your business bringing a professional on board for a specific job or a specified amount of time? Get an independent specialist arrangement in place prior to starting. Using our independent contractor contract template, we will help you prepare a customized agreement that reflects the needs of your particular situation.
Independent Contractor Contract Template
Our independent contractor contract template includes all the vital components of an independent contractor agreement, which includes a clear description of the independent contractor relationship. Developed by real attorneys with years of experience helping businesses just like yours, our contracts go beyond the basic free templates you’ll find online. Affordable, industry-specific, and a-la-carte, no other custom contract provider comes close.
If you’re ready to get started creating an independent contractor agreement that works for you, take a look at our marketplace today or contact us for more information. Our dedicated legal team is always available to assist you.