Independent contract work employs over 64 million Americans, according to MBO Partners. It provides the flexibility and autonomy many professionals need to thrive. But without a contract, there’s no guarantee of work. Create terms for your next working arrangement with a client by using our free independent contractor agreement template.
What Is an Independent Contractor Agreement?
An independent contractor agreement is an official written document between a contractor and a business that outlines the scope, pay, dates, and other details of the engagement so both parties are on the same page regarding work expectations.
Contractors vs. Freelancers vs. Employees
As the name suggests, these agreements are used for independent contractors — not freelancers or standard W2 employees. In case there’s any confusion, here’s a quick breakdown of the key differences:
- Contractors are independent workers who receive a 1099 form from a company. As the name suggested, they are typically hired under a specific contract for relatively long-term work.
- Freelancers are similar to contractors but are typically hired for more flexible, one-off projects instead of operating under a contract's strict parameters.
- Employees are part-time or full-time workers at a company who receive a W2 and are potentially given benefits such as insurance and paid time off.
Depending on your industry, you may also hear an independent contractor agreement referred to as one of the following:
- Freelancer contract
- Consultant agreement
- Contract labor form
- Subcontractor agreement
- General contractor agreement
- 1099 contractor agreement
Learn more about filling a 1099 form.
Why Do I Need an Agreement?
Both independent contractors and the businesses that hire them will benefit from a written agreement. Here’s how:
As an Independent Contractor
As an independent contractor, an agreement between you and the company hiring you is incredibly important. It’s a guarantee of the scope of work, payment terms, and length of the engagement. Without one, you may be terminated early or given fewer hours than originally agreed upon. If you’re relying on steady hours and income, a contract is non-negotiable.
As a Business Looking to Hire an Independent Contractor
As a small business looking to hire an independent contractor, you have certain work expectations that need to be met. You want to make sure you find the best talent for the job requirements.
With a written independent contractor agreement, you’ll have these expectations in a concrete, enforceable form that you can reference for any reason. Perhaps expectations aren’t being met, the contractor is trying to back out early, or there’s a payment dispute. With an agreement, there’s no confusion on the parameters of your partnership, which is valuable liability protection for your business.
What Should an Independent Contractor Agreement Include?
Our template contains all the details you’ll need in your contractor agreement. Here’s a high-level overview of what you should expect to see:
- Independent contractor relationship: The contract should begin with a section stating you are an independent contractor and thus are not eligible for benefits and anything else provided to employees.
- Scope and deadlines: This is one of the most important sections in the contract, as it outlines exactly what work is to be performed and when it’s due.
- Terms of payment: This section states pay rates and how payment will be disbursed. Will you be paid net 30, end of month (EOM), etc.?
- Confidentiality and trade secrets: This section states that the contractor is not to share any insider information.
- Intellectual property: An important section for the employer, this states that any intellectual property created by the contractor belongs to the company, even after the engagement ends.
- Grounds for termination: This section outlines who is able to terminate the contract and under what terms. For example, is a 30-day notice required?
- Disputes: This section states how disputes will be solved — typically under the governing law of the state in which the company operates.
Looking for other resources to help as you grow your business as an independent contractor? We’ve carefully curated the documents and info you’ll need in our template library and business resources page.
Incfile Can Help You Do It All
From LLC formation and Registered Agents to compliance and startup services, we have you covered.