Do you want to employ an independent contractor? If yes, you must put in writing your agreement with them. This will help you to identify and define the roles and responsibilities that come with your professional relationship.

For many purposes, an independent contractor arrangement is beneficial. For instance, it will help you understand several of the agreement’s features, including the classification of workers, taxes, dispute resolution, deadlines, payments, taxes, and more.

From the employer’s perspective, the tax implications are quite different compared to the average employee. For employees, the employer is responsible for not only withholding, but also paying the taxes for income, social security, and medicare.

Contrary to this, an independent contractor is responsible for withholding and paying their own taxes—this is referred to as self-employment taxes. Therefore, the independent contractor will report this when they fill out a personal 1040 tax return form at the beginning of the year.

5 Reasons You Need an Independent Contractor Agreement

5 Reasons You Need an Independent Contractor AgreementAlso, it can help you avoid conflicts, protect you from liabilities, and ensure that you are safe from legal action if the agreement is written correctly. We list five reasons why you need to put in writing your independent contractor agreements below:

1. Information on Project

A formal independent contractor agreement would ensure that the scope of work is extensive and that the contractor completely knows what to do. It is the ideal opportunity to explore the specifics and a summary of what is considered a finished product, including important dates or deadlines.

5 Reasons You Need an Independent Contractor AgreementYou can get CocoSign’s template for independent contractor at our CocoSign Page. Cocosign is an e-sign solution. It is commonly used throughout the world to sign papers. It also enables its users to use a plethora of business templates, letters, rental contracts, commitments, and employment contracts for free.

You can use it to access the independent contractor agreements as well and customize them to fit your needs. While you do so, make sure you state the duties appropriate for all the people involved in the project. This includes, among others, critical staff, partners, project managers, and staff.

2. Juridical Security

You must have legal security in your contracts if you do not want to be saddled with the financial burden of a lawsuit. To ensure that the contractor knows what they are required to do, but the insurance conditions in writing.

Above all, before agreeing to the contract, make sure any person concerned clearly understands the legalities involved. Here are free templates at CocoSign, available for your usage.

3. Status of Classification

The classification status is another reason why your stand-alone or self-employed agreements should be in writing. Putting the agreements in writing also helps you to adequately describe the facts of the job arrangement. Through this, with a business-to-business relationship, you can prove that the project is truly professional.

Status of ClassificationAlthough many people tend to assume that a full-time job has the greatest advantages, that is not always the case. Often the third-party firm you are hired with, provides compensation packages, including paid holidays, life insurance, vision, dental, and wellness plans, and you can still get the benefits you want.

But if you are an independent contractor, employing yourself as part of your own company, then the hourly rate you have contracted represents the fact that you have to purchase your benefits, allowing you the ability to tailor your benefits package to your personal needs.

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4. Responsibility and Licensing

A written independent contractor agreement helps you to ensure that there is liability protection for the independent contractor in question. It also allows you to make sure the contractor is completely approved by all applicable regulatory bodies. Therefore, they are not in breach of any of the laws that bind those working in the industry.

Being a contractor ensures you get paid, at the market rate, for every hour of work you do. Your income could be high if your skills are in demand. You will be able to take advantage of it at higher rates if you are lucky enough to land on a team that needs you urgently to work overtime.

We have addressed injuries and disasters on your land and at third-party locations that can occur. But on the lane, what about? The main component of business insurance for independent contractors is commercial auto insurance.

It’s important for your client and you. As Chron writes, “In the case of an accident happening while the worker is operating as a result of the project he was employed to do, auto insurance policy protects not only the 1099 worker but also the contracting agency.”

5. Intellectual Property and Competition

Finally, in your contractors’ agreements, particularly when you are a self-employed freelancer, it is necessary to make provisions for intellectual property and completion. You may also have an NDA (non-disclosure agreement) that prohibits the contractor from revealing your competitors’ details about the deal.


An independent contractor (IC) has a company or trade of its own in which it provides its services to the general public. The general rule is that if the payer has power over the results of the job, but not what will be performed or how a worker is an independent contractor.

As compared to an employee, an independent contractor is assumed to be self-employed. They have to pay self-employment tax, as well as payroll taxes for Social Security and Medicare, but they have to pay all on their own. You are not liable for withholding anything from payments made to this person.

Before hiring an independent contractor, make sure that the person with whom you intend to do business is an independent contractor. This implies that this person is free to decide how the work is to be done when it is to be performed, and where it is to be performed in certain instances.

TechTalkies365 Team
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