One of the most common issues facing small businesses is how to govern relationships with independent contractors. This is not really surprising, since many small businesses use independent contractors to perform critical operations like website development, marketing, bookkeeping and other important work that keeps the business functioning and growing.
To protect your company’s future, you must have written agreements in place with each independent contractor you hire – yes, even if it is your best buddy from college performing the work. Here are the key terms you want in your independent contractor agreement:
- Full description of the services being provided by the independent contractor
- Description of payment terms, including fixed fee or hourly, how and when payment is rendered
- Description of how out-of-pocket expenses will be handled
- Detail of what materials or equipment will be furnished by the company vs. what the independent contractor will supply, including office space
- Statement that agreement constitutes an independent contractor relationship
- Statement that the independent contractor has the proper licenses and permits to perform the work you are contracting for
- Statement that the independent contractor is responsible for paying their own state and federal income medicare, social security, and other taxes
- Statement that the independent contractor will not receive any benefits you provide employees
- Statement that the independent contractor carries the necessary liability insurance
- The terms by which the agreement can be terminated by you or the independent contractor
- The terms by which you and the independent contractor will settle any disputes
- If applicable, an ownership of intellectual property clause that the work or product you are contracting for belongs to you
- Indemnification clause that states the independent contractor indemnifies you for any violation of patent, trademark or intellectual property infringement by him or her
We can help you develop a tailor-made written independent contractor agreement specifically suited for your business as well as other written agreements you should have in place that govern your relationships with employees, vendors and customers.
To learn more about this, check our our Hiring & Firing page, and be sure to download our Guide to Independent Contractors.
Call our office to schedule a small business consultation session, so we can advise you on the proper use of written agreements to keep your company protected through effective risk management.
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