Free Sample Independent Contractor Agreement Template

 To help you grow your business, we've created a fairly simple yet reliable independent contractor agreement template in Word and PDF versions so you can use it over and over.

What's in this model?

• Service

• Policy

• Termination

What is an Independent Contractor Agreement?

An independent contractor agreement is a written contract that sets out the terms of the working arrangement between a contractor and a client, including:

• A description of the services provided

• Terms and duration of the project or service

• Payment details (including deposits, installments and other billing details)

• Confidentiality, Non-Solicitation and Dispute Resolution Clauses

The Independent Contractor Agreement is also referred to as a Freelance Contractor Agreement.

What is an Independent Contractor?

Also known as a consultant or freelancer, an independent contractor is a business or individual who is usually self-employed and provides a product or service to a client in exchange for monetary compensation.

What is the difference between an independent contractor and an employee?

Choosing between hiring employees or independent contractors is an important decision that defines not only labor relations, but also taxation. The classification of workers is determined by the degree of control exercised by the employer over their work. In an employer-employee relationship, the employer generally controls all of the following factors:

• Where the work is performed, either at the workplace itself or at another location.

• The hours during which the work is performed.

• How the work is done.

• Mandatory attendance at meetings and other functions.

• Use of equipment owned by the employer and made available to the employee for work purposes.

Independent contractors are generally not subject to the same level of scrutiny by the client who hires them. They usually set their own hours, have their own process for completing projects, and own their own equipment. Independent contractors do not receive company benefits, such as paid vacation and vacation time, paid sick leave, and health insurance. The costs associated with direct payment for these benefits are often factored into the contractor's rates. 

You should also be aware of the differences in tax treatment between employees and independent contractors.

For employees:

• You must withhold state and federal income tax.

• You must withhold Social Security tax.

• You must withhold Medicare tax.

• You must pay unemployment tax on wages.

• You must complete a W-2 form for each employee.

For independent contractors:

• Employers need not worry about the above tax issues for employees. Independent contractors manage taxes related to social security, health insurance, etc.

• Employers must produce a W-9 to be completed by the independent contractor.

• You may need to file information returns (Form 1099-MISC) to report certain types of payments made to independent contractors. Generally, any payment over $600 will require a Form 1099-MISC.

What are the types of independent contractor contracts?

In general, there are two types of independent contractor agreements:

• A “by the job” contract: a payment for a specific task (for example, the creation of a logo, the writing of an article, etc.)

• A “yearly” contract: a fixed payment each year (for example, a monthly amount) for a period of a fixed duration (for example, 12 months)

Why do I need an Independent Contractor Agreement?

The first is that they help protect your business interests. The contract outlines exactly what work needs to be completed, when it needs to be completed, and how much you will pay. The second is that it protects you from liability issues and helps protect your assets and proprietary information. If you are taken to court, you have the signed agreement to make it clear to the judge what your expectations were. You may also need a copy of the contract if you are audited by the IRS.

If you're a freelancer, this can help you get paid if you end up in a payment disagreement. You'll look professional if you provide a contract to your customers if they don't have one. It also shows that you are ready to commit to work and time agreements.

Benefits

There are many benefits to hiring a contract employee over a regular employee, including:

• You don't have to pay their FICA tax obligations

• You are not required to offer health insurance or other benefits

• You only have to pay them for the agreed work

• It is often easier to end a contract than to fire an employee

• Less paperwork in general

• You don't have to micromanage their work or schedule

Important Terms

What are the elements of an independent contractor agreement?

Most independent contractor agreements include at least the following information:

• Parties: The contract begins by listing all associated parties, such as the independent contractor, customer, or rental company, and each party's contact information.

• Time limit : Most contracts have specific deadlines. Depending on the scope of the project, the contract may include multiple timeframes for various work products, while others may simply state a timeframe for the final product.

• Services : This section of the contract details the details of the work that the freelancer will perform.

• Remuneration: Depending on the type of project, the compensation section will provide either an hourly wage or total compensation for the project.

• Confidentiality: If there are any necessary confidentiality protections for the project, this clause outlines those expectations.

• Termination: Some contracts may include an “early termination option” clause depending on the project. Most contracts include a section that the client and freelancer initial to indicate that they have completed the work and made payment, thus ending the contract.

• Governance status: Indicate the state under which the contract falls and which will apply the specifics of the contract if necessary.

• Signatures: All parties listed at the beginning of the contract must sign and date where designated.

Some contracts require additional clauses and information. You can customize an Independent Contractor Agreement to meet the specific needs of your project