Independent Contractor Agreement Template

What Is the Difference Between a Contractor and an Employee?

An independent contractor is a self-employed individual or a business that provides services to clients for monetary compensation. Contractors use their own tools and equipment and may hire subcontractors. On the other hand, an employee is hired by an employer who establishes their wages and supervises the employee's work.

Contractors send invoices to their clients for the price of the provided services and handle their own tax filings, while employees receive a paycheck that shows the tax deductions taken out by the employer for each pay period. Employees receive employment benefits - sick pay, paid vacation days, and have health insurance. Independent contractors do not receive any of these benefits from their customers. An employee enters into an employment contract that is drastically different from standard Independent Contractor Agreements.

Service Agreement Vs. Independent Contractor Agreement

Contractor Agreements should not be confused with a Service Agreement - a verbal or written contract between a customer and a service provider. Usually, a Service Agreement is signed when the terms of the agreement are relatively easy to comprehend and the services are performed almost immediately - for instance, a client goes to a hairdresser.

A Freelance Contract is another related document. A freelancer usually works remotely on a number of various projects at the same time, while an independent contractor works from the project location, on one project at a time, for a long period of time.

How to Write a Contractor Agreement?

A simple Contractor Agreement has to include the following details:

1. Names and contact information of the parties.
2. Term of the agreement - when the contractor must begin and finish the work.
3. Description of the services to be provided.
4. Payment details - the amount of money the customer has to pay to the contractor and the negotiated payment method.
5. Confidentiality - the contractor cannot share information obtained during the course of work with third parties.
6. Signatures of the parties.

Related Contracts and Agreements:

• Commission Agreement;
• Compensation Agreement;
• Bookkeeping Contract.