If you have an upcoming project or services for which you require somebody’s temporary assistance, the ultimate option is to hire a contractor for the job instead of a full-time worker. But before employing an independent contractor, you must make them sign an independent contractor agreement.
This contract ensures that both parties involved are at the same point regarding their responsibilities, including the contract’s terms and conditions.
These terms and conditions vary immensely from one contractor to another. In this guide, we merely focus on what a simple independent contractor agreement looks like and constitutes of.
About an Independent Contractor Agreement
An independent contractor agreement is a kind of a contract that clarifies the conditions of a job for which an organization wishes to hire a contractor. It is a document in which a client is clearly ready to pay a contractor for the services he performs.
In line with the IRS, an independent contractor is not precisely listed as an employee. Therefore, a client or a company is not accountable for any tax withholdings. Mostly, contractors are paid on a per-job basis instead of hourly rates, unless, of course, the contractor is an accountant, a lawyer, or equivalent.
Suppose you are a self-employed contractor or an individual or a firm that wants to hire one. In that case, you will initially need to create an independent contractor contract for each job you take.
Before contractors start their work, it will be better to have a contract that has been mutually agreed upon. This ensures that the employer and the independent contract understand the job’s scope in the same manner and have mutually decided how the contractor will be paid.
An independent contractor agreement will protect the business and freelance worker altogether. It keeps both parties from unnecessary misunderstandings and enables them to handle arguments regarding how the job should be done before it begins.
The independent contractor might even state down some terms and conditions within the contract to protect themselves; such as acquiring penalty fees for late-payments or charging a new client’s deposit fee.
Who is an Independent Contractor?
An independent contractor is basically a freelancer or a self-employed worker. Generally, independent contractors can be hired by various individuals and companies to complete specific tasks and projects or deliver certain services. Hence, they serve as independent workers and not employees, as they are entirely free to work anywhere and for multiple businesses simultaneously.
When does the need for an Independent Contractor Contract arise?
For a company and employer, taking help from a professional contractor can be a smart and excellent way to fill for packed periods or when a particular project is in full motion. A contractor’s skills can also be bought in when the regular team members’ skills are lacking.
An employer certainly has no obligations to pay independent contractors for their sick leaves or vacation period, nor do they have to deal with taxes.
Note that an independent contractor is unlike a regular employee. Thus, hiring a contractor/freelancer can be relatively inexpensive for a firm than hiring, training, and giving salary to new employees.
Having said that, you might want to prepare independent contractor agreements for any sort of freelance job to avoid any vagueness. A contract lays out work-related details that have been agreed upon by both parties. It usually comprises all the deadlines, the pay rate, and key deliverables.
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Things that should be included in the Agreement
While creating an independent contractor agreement, it is essential to know which things to include in the contract. It basically outlines the required terms of the job arrangement between two parties and includes a description of the duration of the project’s service, the confidentiality, payment details, non-solicitation, and dispute resolution divisions. Here are the elements of a simple independent contractor agreement free of cost to give you a basic idea.
- Names of both parties: The contract should include the name and contact information of both the parties who are signing the contract.
- Scope of the project: The contract should define clear guidelines of the freelance project’s scope. This ensures that the employer and independent contractor mutually agree on the same ending point for that project.
- Services that will be delivered: The contract should include a list of all the independent contractor’s services to the client. These services should be written down in detail. The contract should also include how any additions or modifications to the original project can be dealt with.
- Schedule and dates: The contract should comprise all the relevant dates and schedules, covering each milestone and completion deadline.
- Explanation of your legitimate relationship
- Compensation: The contract should include clear terms for payment so that the independent contractor can get paid on time.
- Insurance: The contract should include whether insurance will or will not be attributed to the independent contractor for the service they provide.
- Travel Expenses: The contract should consist of whether the employer will or will not reimburse the independent contractor’s travel expenses.
- Termination: If the working relationship between the independent contractor and the employer does not work for any reason, the termination clause in the contract can allow either party to leave the agreement.
- The signatures of the employer and the independent contractor.
Here is what a simple independent contractor agreement typically looks like.