Put Your Independent Contractor Agreements in Writing
Written independent contractor agreements provide legal protection.
For most types of projects you hire an independent contractor (IC) to do, the law does not require you to put anything in writing. You can talk to the IC, agree on the terms of your arrangement, and have an oral contract or agreement that is legally binding. Just because you can doesn't mean you should, however.
The Importance of a Written Agreement
Oral agreements invite costly misunderstandings because there’s no clear written statement of what the IC has agreed to do, how much you have agreed to pay, or what the two of you will do if a dispute arises.
These misunderstandings might be innocent -- you and the IC may genuinely have different memories about what you agreed to -- or they may be purposeful. Either way, it will be your word against the IC’s, and there is no telling whom a judge or jury will believe. It’s much safer to rely on a written document that clearly sets out the details of your relationship.
Even more important, a written independent contractor agreement helps establish a worker's independent contractor status by showing the IRS and other agencies that both you and the worker intended to create a hiring firm/independent contractor relationship, not an employer/employee relationship. (But don’t expect the written agreement to be a magic bullet: A written agreement is useless if you still treat the IC like an employee.) To learn how to properly classify IC and employees, see Require Documentation When You Hire Independent Contractors.
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