Do you need to use a Freelancer Agreement? Yes.

An independent contractor agreement is used when you hire another person to do work for your business. It is called a freelancer agreement.

So, why do you need an independent contractor agreement? You just started business. You don't wanna waste your savings on something unnecessary. Well, I am here to tell you why it's important for your business.

I am going to give you reasons and explain why independent contractor agreements are important. How it saves your business from extra tax, intellectual ownership, and more.

AVOID an employer-employee relationship.

If a person is working for you as an employee then an independent contractor. Then there are many legal and tax implications you need to take care of. Are you ready to consider labor laws? Health insurance benefits and withholding of taxes are all included in labor laws.

Suppose you don't have an independent contractor agreement. You will be responsible for these extra implications.

Clear scope of work.

What is the person doing for you? And what is he not doing? If you think that you can clear it out with just humble talk. Then you are absolutely wrong! Misunderstandings are so common in business.

Clear communication clarifies what a person's duties are in the entire project. It sets the context for the whole project, not just the contractor's part. Make sure you both are on same ground. Put everything in writing.

Payment terms.

When and how much are you going to pay for the work? Are there any situations where you can withhold payment? Money is the purpose of business. You need to be clear about this issue. With clear legal template to solve this issue, you can avoid misunderstandings.  

Timeline.

Independent contractors are different from typical employees. Work done in the most efficient way is their duty. They manage their work in their own way. But you should still place deadline(s) or a general timeline. Otherwise, the longer your project goes the more delayed it will be. Clients want their products and services on time. So it's important to have work done on time.

Ownership of Intellectual Property.

If the independent contractor creates a design or method for the business. Who owns it? In business that property will have value for long time. Even after your relationship ends with an independent contractor.

This can be major issue in business. In some instances, you might have to pay to dispute this issue. So figure out these things before having an independent contractor. Or own the consequences.

Confidentiality Terms.

You have this brilliant idea for business. A type of idea that can make you a millionaire. You have hired someone to help you. Now, are they trustworthy? Remember even the most trustworthy people turn their back when money is involved.

So like what is keeping them from going to a competitor? They can share all of their business sensitive information with competitors. You have worked hard to have this brilliant idea. Made a customer list and generated best formula! You can lose it.

Have an agreement to limit their ability to share your sensitive information.

Insurance and Liability.

What if independent contractor’s task requires insurance? What if they hurt someone while performing a task?  Who is gonna pay for that? There are so many examples of this. Where these incidents have caused businesses devastating losses. Have everything already planned to avoid these surprises.

Arbitration Clause

An arbitration clause is a part of an independent contractor agreement. It helps resolve issues wisely. Any disputes between you and contractor will be resolved through arbitration.

It is private and less formal. You have a third person (the arbitrator) who will hear the problem from both sides. With everything open, arbitrator will make an unbiased decision. It saves you both from going to court. Plus it has fewer requirements so your issue will be resolved quickly.

Termination Clauses

What if you don't want to work with an independent contractor? What if you are not satisfied with their work? Never compromising on quality is the way to build a rich business.

Handle these situations with the help of termination clauses. These clauses help you understand the rights of both parties regarding termination. You can terminate the contract if scope of work changes.

Sum up

After starting business. You only want to work. And don't be disturbed by these problems. Save yourself from these hustles by purchasing Individual Legal Templates like independent contractor agreements, and more. Protect yourself, and your business, by having agreements in place before misunderstandings and chaos occur.