An independent contractor agreement is a legal agreement between an independent contractor and their client. Also called a 1099 agreement, or a business contract, this document details the services the contractor agrees to perform and the terms of the job.
We get it—making a legal contract all on your own is intimidating. Which is why we have a free business contract template you can use. But before you jump into the template, it’s important to know the basics of an independent contractor agreement.
Why you need an independent contractor agreement
It’s tempting to skip drafting a contract and get straight to work. You both trust each other, so why bother with the legal stuff?
First, an independent contractor agreement outlines the rights of all parties involved. This helps answer questions like, “Who owns the intellectual property?” and “What details of the project need to remain confidential?” Having these questions answered before you start working together helps prevent conflict and protects the legal rights of both parties.
If you’re a contractor, this agreement can help you resolve payment disputes if there’s an error or your client refuses to pay you.
If you’re hiring the contractor, the terms of the agreement can also help establish the person as a contractor and not an employee. Just keep in mind that even if the contractor has signed an independent contractor agreement, that doesn’t automatically make them a contractor. Worker classification is based on the worker’s actual treatment, not what you agreed to in the contract. You can learn more about the difference between a contractor and an employee here.
What’s inside an independent contractor agreement?
Here’s what an independent contractor agreement typically includes:
- Services provided and deliverables
- Term of service
- Payment information, such as cost of service, billing procedure, payment due dates, payment method, and reimbursed expenses, if applicable.
- Agreement to act as an independent contractor, which states who pays taxes and the contractor’s eligibility for benefits and workers’ compensation insurance
- Confidentiality clause
- Intellectual property clause
- Contract termination clause
- Arbitration clause
These templates are for illustrative purposes only and should not be construed as either actual or constructive legal advice being given.
Andi Smiles is a small business financial consultant and coach. She’s helped hundreds of small business owners take control of their business finances while uncovering their emotional relationship with money.