Independent Contractor AgreementI met with a new client this week who was starting her graphic design business. She is leaving her current job at the end of the month and smartly wanted to get a head start on the process. We had a nice chat to help her plan out the next month as she gets her business foundation in place.

One of the more in-depth conversations we had was about the future of the business. Specifically, whether she needed to hire full-time employees. Like most new businesses, she wasn’t sure that she would have the revenue to support hiring an employee right when she started. But that’s not the only option.

Especially for small businesses, I’m a big fan of using virtual assistants or independent contractors when possible. It allows for more flexibility and helps to control your initial overhead.

Our discussion focused around her hiring some independent contractors to help out.

What is an Independent Contractor?

An independent contractor is someone you hire to perform a specific task for your business. Rather than open-ended work, they are often limited in the time they will work or projects/tasks they will work on. The independent contractor often has their own equipment to complete your project or task.

Some examples of independent contractors:

  • Writing social media posts
  • Designing your website
  • Writing grant proposals or other business proposals
  • Writing reports for your clients

What is an Independent Contractor Agreement?

If you’ve decided to hire an independent contractor, it’s a good idea to have an agreement. The agreement will be between you and the independent contractor. It should be in the form of a written contract. The goal of the agreement is to outline the scope of the work that the contractor will be performing for you.

One of the most important parts of the agreement is that it will specifically say that the contractor is not an employee for legal and tax purposes. Without this provision, your agreement may not protect you from the IRS claiming that the person is actually an employee of your business.

The agreement should also address:

  • The services to be performed
  • How much the contractor will be paid
  • When the work starts and ends
  • How the working relationship ends
  • Benefits (if any) that the contractor receives
  • Protection of your intellectual property

There are other provisions that you should consider for your agreement. These are some of the more common ones.

What if I Don’t Have an Independent Contractor Agreement?

If you don’t have an independent contractor agreement, the IRS may treat the person you are working with as an employee. You could then be responsible for unemployment benefits, overtime pay and taxes. You could also be legally responsible if the person is injured on the job and have other legal responsibilities that you did not intend.

Next Steps

If you or your business are considering using an independent contractor, give me a call and we can sit down to discuss how to tailor an independent contractor agreement for you or your company – (877) AMAYERS.

Andrew Ayers
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I work with business and estate planning clients to craft legal solutions to protect their legacies.