- August 21st, 2013
- John Dillard
- Virtual CFO, Business/Tax Consulting, Financial Planning, Business Loans & Money Management
Do You Need to Formally Retain Your Independent Contractors?
Do You Have a Contract for Your Independent Contractors?
How Are You Going to Document The Employment of Your Independent Contractors?
If you have reviewed with your CPA the IRS criteria for determining if your workers are employees or independent contractors and have confirmed they are indeed independent contractors it is most prudent to document that agreement contractually.
The below is a Sample Independent Contractor Agreement. Be sure you work closely with your corporate lawyer/attorney before finalizing any legal documents to ensure all of your business interests are protected and assets safeguarded.
As a second part of the series I have provided below what a Sample Independent Contractor Agreement. Although a CPA is often the one who is best served to guide and direct an analytical and careful evaluation of the facts as presented. However care should be taken to have an attorney also be involved in drafting an Independent Contractor Agreement so that they might adequately address any intellectual property issues, confidentiality, ownership of all work products, etc.
SAMPLE INDEPENDENT CONTRACTOR AGREEMENT
Contract made_________________, 20____,
Between _________________(Name of Corporation: hereinafter called Corporation) located
&_________________(Name of Contractor: hereinafter called Contractor) located at_________________________________.
In Consideration of the mutual promises set forth herein, it is agreed by and between Corporation and Contractor that:
Section One: Description of Services Performed by Contractor
The work to be performed by Contractor is in the Contractor’s usual line of business, including, but not limited to the following:
- Contractor will provide services pursuant to customer’s needs, desires, and requests. The Contractor will ensure that all work performed is in accordance with customer’s standards and per customer’s request.
- Contractor agrees to uphold standards of work and services that customer’s dictate and in accordance with professional standards.
- Contractor agrees to provide services in accordance to deadlines and requests of customers.
Section Two: Payments
Payments will be made on a ________basis to Contractor at a rate of ________per ______________(project) performed. Contractor will summarize their billing by preparing an invoice to the Corporation. Monies calculated, as being owed, will be paid _____days after they are presented to the Corporation.
Section Three: Relationship of the Parties
The parties intend that an Independent Contractor – Corporation relationship will be created by this contract and that said Contractor is not to be considered an employee of the Corporation for any purpose. The employee’s of the Contractor or Contractor are not entitled to any of the benefits that Corporation provides for Corporation’s employees. It is understood that Corporation does not agree to use Contractor exclusively. It is further understood that Contractor is free to contract for others owners or pursue any other business interests while under contact with the Corporation. The Independent Contractor hereby acknowledges that he or she is accountable for Independent Contractor’s own federal, state, and self employment income taxes and all liability and medical insurances and will not hold Corporation responsible for these or for any of the following including unemployment compensation, worker’s compensation, social security payments or for any other taxes or penalties associated with any failure on Contractor’s part to file any declarations or pay any monies due to any tax or licensing authority. The Independent Contractor acknowledges that he or she is to sign the attached W-9 certificate, acknowledging their independent contractor status, prior to issuance of any monies. The Contractor, as a separate business, is expected to conform and be solely responsible for all federal, state, and local licensing and reporting requirements. Contractor acknowledges that they are responsible for their own training and instruction. There are no required work schedules, sequences, written quotas, or production or sales reports. Contractor is responsible for all tools and supplies necessary to fulfill their contractual responsibilities.
Section Four: Liability
The work performed under this contract will be performed entirely at the Contractor’s risk. While Corporation assumes responsibility for its actions; the Contractor agrees to accept complete responsibility for any and all liability or loss arising in any way out of their performance of their responsibilities under this contract. These liabilities shall include but are not limited to purchases of tools and supplies as well as other business costs.
Section Five: Duration
Either party can cancel this contract at any time with or without cause on 30 days written notice so long as all:
1. All Balances are paid.
2. Proprietary materials are returned to their respective owners.
3. Existing contractual agreements/responsibilities are substantially resolved.
Section Six: Professional Standards
Contractor is expected at all times to show professionalism in the manner in which all aspects of the work performed. The Contractor is expected to provide these services on a timely convenient manner conducive to customer’s satisfaction. The Contractor is expected to maintain their finished work product and appearance in a manner, which will be in accordance with professional standards and as agreed. Contractor also agrees to perform services in accordance with professional standards and practices of the industry and all applicable federal and state laws.
Both parties hereby agree that the above information is accurate and truthful, and that a mutual understanding has been reached regarding the rules of Corporation and Contractor. This contract is to be followed and interpreted under the rules of the State of Georgia. If any part of this contract is declared null or void, the remaining parts will remain in full force and effect.
Contracts should then be signed and fully executed listing the name, address, titles and date signed by all parties concerned.
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