Many services that could provide benefits to your business can be obtained by hiring contractors. An independent contractor agreement is a written contract that describes the services to the client. It outlines the business relationship between a contractor, a hiring company, or in some cases, a freelancer.
This is a legal agreement that covers the scope of work, payments, deadlines, confidential information, and some other details of the independent contractor relationship. Most of the time, an independent contractor gets his pay on a per-job basis unless he is an accountant, lawyer, or equivalent.
What Is an Independent Contractor Agreement?
Many business owners required a contractor agreement between a contractor who is willing to pay for his performance of services. An independent contractor is also known as a freelancer or consultant who is self-employed and provides services in exchange for monetary compensation. It is necessary to understand the different sections of the agreement and how they function as a whole.
The independent contractor agreement form describes a relationship that legally binds both parties involved to cover the work, manage the expectations, and avoid misunderstandings.
Moreover, hiring companies are required to provide the contractor contract for the client with numerous clauses and agreements. Such agreements are not easy to make, but they save both parties from material, legal, and job-related headaches.
When Do You Need an Independent Contractor Agreement?
A simple contractor agreement is needed when an individual wants to protect business interests. It dictates exactly what task will be completed when it will be finished, and how much you will be paying. Moreover, it shields you from any liability issues and assists in saving your assets and proprietary information.
Let's say if any of the people from both parties are taken to court, then he has a signed contract for contractors. It shows your expectations clearly to the judge. Sometimes, a copy of the contract is needed when a person is audited by the IRS.
The service contract template is beneficial if you are going to employ international contractors. It serves the purpose of protecting the business interest, ensuring that the client gets the exact service which they have asked. Later, the helper gets his payment according to the agreement.
When you are going to hire an independent contract, treat them as independent business people. Well-written independent contracts will help to protect from liability, avoid disputes, and keep them out of the court.
What Should Be Included in an Independent Contractor Agreement?
A contractor contract template is a legally binding document between an employee and a company that hires him. That is why it should be arranged according to the actions that will be taken.
- Scope of work: The easiest part of the agreement to create should be specific and outline all the deliverables to receive from the contractor.
- Timeline for the work: The contractor agreement should frame the timeline for the work with all the deadlines, i.e., when you expect the final work.
- Terms for payment: This section specifies how and when the contractor will get his payment and specify who will pay for raw materials or equipment, etc.
- Confidentiality: It explains that the contractor can not download, share, or use any of the trade secrets and confidential details that they encounter in the course of their work.
- Disputes: In the course of work, if there are disputes or misunderstandings, then this section will specify how they will be dealt with.
Self-employment can be a satisfying career option for most people in the world. Therefore, with any employment relationship, it is a good act to have an independent contractor agreement. It will save both parties from any future disputes, or money issues, as it explains every single point in detail. Read it thoroughly before signing.
Independent Contractor Agreement FAQs
Can the independent contractors gain benefits offered by an employer?
No, independent contractors can not gain benefits offered by an employer as they are self-employed and responsible for their own benefits.
Are there any risks and responsibilities with being an independent contractor relative to the employee?
Some risks and responsibilities are involved in self-employment that employees generally don't assume. For example, the independent contractor assumes all responsibility to manage billing/collections, maintains licensing and insurance with performing the job.
Are the independent contractors protected by the same employment laws as a hired man?
Since the independent contractors are self-employed, so they are not protected by employment laws. For example, laws that are provided for safe work, free from discrimination and harassment, but may exclude independent contractors. This emphasizes the importance of a written agreement that explains how the relationship will work out from both sides.
What to do if the client is not satisfied with the quality of work or services we are offering?
An independent contractor is responsible for satisfying the client by delivering the best customer service. Your standard independent contractor agreement should explain how you handle customer-related complaints.
What should I do if the customer wants me to sign a contract immediately?
In any agreement, if the customer is not giving enough time to think it over or consult with others, then you should take it as a warning. Give at least 24 hours to think and to discuss it with professionals before you sign any documents.