Know The Importance Of Independent Contractor Agreement
Independent Contractor Agreement: Why Buyers/Clients Need Them and What It All Entails
Independent contractor – This is a person who is working for
someone
but not technically as an employee. If you own a business and have
someone working for you that is not an employee but an independent
contractor, then it means they own their own business and must take
care of their own taxes, insurance and expenses. And, when they work
with you, they probably submit to you an independent contractor
agreement
Independent
Contractor vs. Employee
When
you hire employees to work for you, you can’t circumvent state laws by
claiming they are independent contractors. After all, ever states has
set rules and regulations that define what an independent contractor
is. The most important rule of hiring an independent contractor is that
you may not tell them when and how to work. They have their own
schedule and handle the project as they see fit. The moment you begin
supervising them such as:
- When they must get started
- How the works needs to be done
- Providing them with tools to complete the job
Then you treat them as an employee.
Why You Should Have An
Independent Contractor Agreement
An
independent contractor agreement is used when you decide to make a
contract; although having it in writing isn’t always necessary. More
often than not, an independent contractor agreement is placed in
writing and is more important than an actual employee agreement because
it’ll outline what the job is and when the expected due date is. An
independent service contract tends to lay out the job’s location and
work scope. Plus, the parties will concur that the job is done in a
reasonable amount of time unless exceptional requirements are stated in
another attachment.
There may be times when you must change or fire an independent
contractor for any number of reasons:
1 – Weather conditions can delay a deadline.
2 – Contractor may have been in an accident and cannot perform his/her
work in a normal manner.
3 – Contractor may get sick or have a family emergency that delays work.
Should
any one of these things happen, you can find forms for both the
modification of the independent contractor agreement and the
termination of independent contractor agreement.
For tax reporting purpose, it is important to distinguish whether the individuals are employees or independent service contractor. Therefore, you should know the business relationship between you and the service provider. When you do that, ensure to record all information and the evidence of the degree of control.
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