In this 7-minute read:
- What is an independent contractor agreement?
- What is the purpose of an independent contractor agreement?
- Do you need an independent contractor agreement, and what should be included?
- Can you negotiate the terms of an agreement?
- How often should an independent contractor agreement be renewed?
- Where can I find a sample independent contractor agreement?
- Free independent contractor agreement template
Becoming an independent contractor can be a liberating thing. It allows you the chance to work for yourself, set your own schedules, and spend more time doing the kind of work that you really enjoy. As the gig economy thrives and more people try their hand at freelance or independent contractor work, businesses across the country are hiring independent contractors to help supplement areas where they don’t have full-time employees.
As an independent contractor, you may be asked to sign an independent contractor agreement by a company that hires you. You may even want to request that each of your clients signs an agreement with you. Throughout this article we’ll discuss the importance of independent contractor agreements, whether or not you need one, and how to get started.
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What is an independent contractor agreement?
An independent contractor agreement, also known as a 1099 agreement, is a written agreement between an independent contractor and a client. It generally outlines the terms of the tasks that you’ll perform, including rates, duration of time, and basically the scope of the work that you’ll be doing throughout your time working for your client.
What is the purpose of an independent contractor agreement?
The purpose of the agreement is often to have a legal backing for any terms of work that you and your client have agreed upon. This written agreement can help clear confusion over worker classification, your payment terms, taxes, how to resolve disputes, and more. It sets the ground rules for your work with your client.
Independent contractor agreements are generally requested by a company that you may work for. This is often to help them cover their responsibilities for taxes and benefits, to protect their intellectual property, and to set other guidelines they feel are necessary for the security of their company.
As an independent contractor, you may want to have an agreement ready for your clients that don’t require one—for your own protection. Setting terms in a written agreement holds your clients accountable to those terms and gives you some legal protection if they don’t hold up their end of the deal.
Who can use a freelancer, gig-worker or contractor agreement?
An independent contractor agreement can be used by any contractor, freelancer, consultant, or other type of independent contractor who wants to have a written agreement with their clients. On the other side of that, any company wishing to hire an independent contractor may outline an agreement that must be signed before starting their services.
Do you need an independent contractor agreement?
It is not a legal requirement in most places for independent contractors to have an independent contractor agreement. That being said, it is smart to have some form of written proof of the terms of your work with any of your clients.
Even if you don’t require your clients to fill out an agreement with you, you may have clients who require you to fill out an agreement to work for them.
Not having a written agreement can open up grounds for misunderstanding (whether innocent or intentional), and it can save you a lot of time, money, and stress just to have your work outlined in an agreement from the beginning.
What should be included in an independent contractor agreement?
Your independent contractor agreement may vary from client to client (in fact it probably should if the scope of work varies between each client or project). Whether you are signing an agreement prepared by a client or creating your own agreement, these are some terms that you should include and/or be prepared to sign off on:
- A description of the independent contractor and the client, including legal names, addresses, contact information, and the relationship between the client and contractor (it’s important to state the fact that this will be independent contractor work so that your employment status is properly classified)
- A description of the work that you will be performing—this could be a list of services that you will provide
- The terms of payment, including your rates (whether hourly, by project, or other terms that apply to your field) and when and how you will be paid
- An explanation of who will be responsible for expenses (independent contractors generally cover their own expenses, but depending on the project, you may get resources from your client as well)
- A statement that indicates you have all necessary permits, certifications, or licenses to perform the work for which you are being hired
- A statement that you will be responsible for your own state and federal income taxes
- Acknowledgement that as an independent contractor you are not entitled to benefits that your client offers their full-time employees
- A statement that you have liability insurance (if applicable)
- A description of the duration of the agreement (if applicable)
- A description of the circumstances under which the agreement can be terminated
- An explanation of how disputes will be resolved (mediation, etc.)
Some agreements may be much more in-depth than this and others may be much simpler depending on the work you are doing and the client it is for.
How do you start or request a contractor agreement?
When you are in the interviewing process, applying for a project, or about to start work for a client, you should discuss an independent contractor agreement. This is something that should be completed before you begin the job.
If your client hasn’t brought up any kind of agreement of your work for them, then you should ask them about it. Make sure that when you discuss the terms of your work, you get everything approved in a written format. Even having an email agreement is better than just having verbal communication, and can be helpful in the case of a misunderstanding or dispute.
If you have a written agreement prepared, send that over to your client to review before agreeing to begin work for them. Likewise, if they send you an agreement, review it and make sure you are comfortable with the terms before signing anything.
Can you negotiate the terms?
You can absolutely negotiate your independent contractor agreement with your client. It’s important to note that some clients, especially larger companies with corporate rules, may not be willing to negotiate or change their terms, though.
But you are your own advocate in the job game when you start working for yourself as a contracted hire. Set the terms that you are willing to work for and negotiate your agreements until they are in a place that you are comfortable with. In some cases, it might even mean that you give up some work because you aren’t satisfied with the terms of the agreement. Just know what you are willing to work for and be ready to set those terms with your clients.
How often should an agreement be renewed?
An independent contractor agreement can last for a long time, if the terms are set for a longer duration. But even when you are in an agreement for a longer period of time, it can be good to review and renew it periodically. Cases when you might want to renew or change the agreement include:
- When your or your client’s information has changed (business name or address)
- When you’ve made a change to the scope of work, like adding new services or deliverables that weren’t previously discussed in your agreement
- When your terms of payment have changed, like if you’ve updated your rates to stay competitive or changed the method of payment you are receiving
Free independent contractor agreement template
Are you ready to get your own independent contractor agreement in place for your next client? There are tons of free templates and sample agreements out there that you can use so you don’t have to reinvent the wheel.
Check out these sample independent contractor agreements from eForms:
For more in-depth agreement templates by state, profession, or type, visit eforms.com.
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