Small Business


Intellectual Property

*Supplements for specific legal matters can be added at any time when you choose the monthly subscription option only. Supplements are not available on the annual subscription option at this time.

Monthly and annual membership fees paid for the current membership period are non-refundable and the contract remains active until the end of the Eligibility Period.

Affordable Legal Help For Everyday IssuesInfo icon

 September 04, 2017

9 Reasons You Need an Independent Contractor Agreement

New independent contractor employee shaking hands with boss

Independent Contractors

Whether you are an independent contractor or intend to utilize one, you should have a written agreement to clearly define the roles and responsibilities of your professional relationship. An independent contractor agreement may help clear up confusion over worker classification, payments, deadlines, taxes, dispute resolution and more.

A well-written agreement may also help you avoid disputes, protect you from liability and keep you out of court. Your LegalShield provider law firm can help you review the terms of an agreement before you sign.

1.    Worker Classification – For employers, incorrectly classifying an employee may have significant tax implications for your business. Just because you define a worker as an independent contractor in your agreement does not mean the IRS will agree with your classification.  Once you are confident that the worker is an independent contractor, clearly define them as such in your agreement. If you are an independent contractor you should also understand these guidelines. If you are in fact treated as an employee, you may be entitled to benefits and your tax liability may change. If you have questions call your LegalShield provider law firm.

2.    Responsibilities – Use the agreement to lay out the exact nature of the work to be completed. Define materials to be used, expenses, workspace, development, delivery and any other details of the work. Set out the lines of communication. Who will be the primary point person for both parties? What is the preferred method of communication? How often will you meet to review progress or finished work? Setting clear parameters will help avoid frustration and miscommunication.

3.    Deadlines – Delays and missed deadlines are frequent points of contention. Clearly define important due dates and production deadlines, as well as the consequences for failing to meet them. Independent contractors should make sure they can realistically meet these deadlines prior to signing, particularly if there are financial ramifications for failing to complete work on time.

4.    Payment – Spell out the exact cost for work to be completed and how it will be invoiced and paid. If any additional work is required that falls outside the scope of the agreement, how will it be billed? Will you require

 5.    Taxes & Benefits – Your agreement should make it clear that the independent contractor is responsible for paying their own state and federal income tax. In addition, the agreement should state that the contractor is not eligible to receive any employee benefits.

6.    Liability & Licensing – Confirm in the written agreement that the independent contractor has liability insurance and is fully licensed by the state and any other relevant regulatory agencies.

7.    Intellectual Property & Competition – You must specify who owns the intellectual property created by the independent contractor under the agreement. You should also include a nondisclosure agreement, which prevents the other party from sharing information with competitors. If an independent contractor has access to customer payment data or any other sensitive personal information, you may also have them sign a confidentiality agreement. Talk with your lawyer to determine the best means to protect your intellectual property and customer data.

8.    Dispute Resolution – You may choose to include a clause requiring disputes to be settled via mediation. This may help you avoid some legal fees in the event there is a dispute but may not always be in your best interest. Talk with your lawyer about the options available to meet your needs.

9.    Termination – Set the duration of your agreement. Will the agreement terminate after a year or once work is complete? Who can terminate the agreement prematurely and under what circumstances? 

LegalShield provides access to legal services offered by a network of provider law firms to LegalShield Members through member-based participation. Neither LegalShield nor its officers, employees or sales associates directly or indirectly provide legal services, representation or advice. See a plan contract at for specific state of residence for complete terms, coverage, amounts, and conditions. This is not intended to be legal or medical advice. Please contact a medical professional for medical advice or assistance and a lawyer for legal advice or assistance.

Related Content

Smiling man working and talking on a cell phone in a casual workspace.

Does an Operating Agreement Need to be Notarized?

An operating agreement, one of an LLC’s (limited liability company) most important legal documents, should be one of the first documents you create when you form your LLC. So, does an operating agreement need to be notarized? Drumroll please . . . the answer is: no!...

Female shoe business owner

5 Steps to Write an Operating Agreement

As a business owner, it’s important to create a document that will serve as a list of rules by which your business will run. This is what an operating agreement is for. By creating an operating agreement, you’re crafting a document that states in no uncertain terms...