How to Write a Independent Contractor Agreement

What is a Independent Contractor Agreement?

A contract defining the working relationship between a business and an independent contractor.

When to Use This Letter

You should send a independent contractor agreement when:

• You are hiring someone to complete a specific project or ongoing work
• You want to clarify that the worker is not an employee
• You need to define scope of work, payment terms, and deliverables
• You want to protect intellectual property and confidential information
• You need to establish liability and insurance requirements

What to Include

Your independent contractor agreement should include:

• Names and addresses of both parties
• Detailed scope of work and deliverables
• Payment amount, schedule, and method
• Project timeline and deadlines
• Independent contractor status confirmation
• Intellectual property ownership terms
• Confidentiality provisions
• Termination conditions
• Liability and insurance requirements

Sample Language

Here's an example of how to structure your letter:

This Independent Contractor Agreement ("Agreement") is entered into as of [DATE] by and between [BUSINESS NAME] ("Client") and [CONTRACTOR NAME] ("Contractor"). Client desires to retain Contractor to provide [SERVICES], and Contractor agrees to provide such services under the terms and conditions set forth below...

Note: This is sample language only. Your actual letter should be customized to your specific situation.

Common Mistakes to Avoid

• Misclassifying an employee as an independent contractor
• Not clearly defining deliverables and acceptance criteria
• Omitting intellectual property ownership clauses
• Failing to address expense reimbursement
• Not specifying how disputes will be resolved
• Using boilerplate agreements without customizing for specific situation

Legal Considerations

The IRS and state agencies scrutinize independent contractor relationships to prevent employee misclassification. Key factors include degree of control, financial arrangement, and permanence of relationship. Misclassification can result in back taxes, penalties, and employee benefit obligations. Consider using IRS Form SS-8 test to verify proper classification.

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