Many people work as independent contractors in services to others. While one person can be an independent contractor, so can a company.
For example, if you need to hire someone to paint your kitchen, that can be a self-employed individual or a painting company. You could be a freelancer or own a company working as an independent contractor. Either way, you will use an Independent Contractor Agreement to outline the terms settled.
An independent contractor is not an employee. If a company is caught presenting an employee as an independent contractor, they could be in trouble with the IRS or up to state authorities.
The Independent Contractor Agreement is usually for a period or single service. However, it could be drafted when you need recurring services from the same independent contractor.
Both the hiring entity and the independent contractor come up with the agreement.
Depending on your state, an Independent Contractor Agreement may also be known as:
Anyone who needs the services of an independent contractor benefits from having the Independent Contractor Agreement. Alternatively, as mentioned, if you work as an independent contractor or own such a company, you can use the document to protect your interests and the other party's.
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If you're a freelancer, you may need to develop an Independent Contractor Agreement all the time. It's a savvy business practice to ensure you get paid for the work done. This is best accomplished starting with a template.
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To make it legally binding, both parties have to sign the agreement. Notarization is not required, but if either party requests it, that may make the signature harder to challenge in the future.
The hiring entity and independent contractor should each have a physical copy of the Independent Contractor Agreement.
For the worker, there are many reasons why using an Independent Contractor Agreement is better than using an Employment Contract. You don’t have to have your income withheld every other week, for one. Also, independent contractors are usually subject to less micromanagement. For the hirer, if you don’t want to worry about hiring and firing, hiring an independent contractor means that the working relationship is over when the job is over. Overall, this arrangement requires much less paperwork than full-time employment. For example, Uber drivers are treated as independent contractors.
You might hesitate to hire an independent contractor out of fear that he or she might disclose confidential information. In such cases, you can include a confidentiality clause or create a separate agreement outlining that the independent contractor would not disclose any sensitive information learned at the threat of litigation and fines. It is best to do that in advance but, even if you already have an Independent Contractor Agreement, you can draft another Confidentiality Agreement and ask them to sign it.
The US copyright law states that the owner of the independent contractor's intellectual property is the hiring company. So, regardless of what you've created under the agreement, it belongs to the person or company hiring you. That covers everything including artwork, creative writing, and such. The only exception would be if the Independent Contractor Agreement has it tailored otherwise.
If the hiring company doesn't use an Independent Contractor Agreement, it risks being viewed as an employer in the eye of the law and the IRS. That means they could end up being responsible for a lot more, such as paying minimum wages and overtime. For both the contractor and the hiring company, not having the agreement means there are no guarantees that either party will abide by what is agreed on verbally.
Nowadays, it's relatively easy to find independent contractors for any work. There are many online sources where you can search for people offering their service in the short term. Usually, you will be able to see the fees and rates and the full scope of what they offer. Alternatively, you can ask for recommendations from other companies and individuals.
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