With the rise of businesses, defining the role of an independent contractor is gaining serious momentum. As a result, filling this role requires prudence just like any other position in your organization. You first have to understand what an independent contractor is.
Who is an independent contractor?
An independent contractor can be one or more people who have a separate business from yours. They can include freelancers such as artists, programmers, web designers or professionals such as attorneys whom your company will pay for their services separately unlike the other employees.
Taking an example of hiring a plumber when you need your pipes fixed, independent contractors such as the plumbers will offer their services on the basis of the project at hand. The good thing however is that you don’t need too much paperwork when hiring these professionals. You are not involved in setting up income and FICA taxes. However, you must ensure that the tax ID of the person you are hiring is legit and also ensure the person is qualified for the job, has a good reputation and is of course dependable. Furthermore, you must ensure that the contractor can keep crucial company secrets and will not take company employees or customers
Legal documents required
- Application, qualifications and/or resume
Before paying for any service by an independent contractor or employee, you must ensure that they have the right qualifications. This means that you must have a document(s) showing their qualifications and their portfolio. They must also follow an application procedure that includes completing an application form. This application can be used to determine the best candidate for the job. Complete with the application, there should be references to past employment and people who know the person being hired as this will ease verification of dependability of the contractor. You must file or keep copies of these documents as they can be used for reference in the future.
- W-9 Form
This document is important as it documents the payments you make to contractors. It is required by law that if you make payments of $600 and more a year, you must provide a W-9 Form which indicates their name, address, and taxpayer identification number. Each independent contractor must have this document.
- Written contract
Having a written contract is a good way to start your relationship with your contractors. Doing so ensures that you have documents which stipulate your relationship and can be presented to a court of law in case of a dispute. The written contracts should be separate for every contractor and each party should have a copy of the contract for reference purposes. It should be signed by both parties to indicate that they are in agreement with the content. The written document should highlight the scope of work, when the job is to be carried out, deadlines, amount and timing of payment. It should also indicate the person who is hiring and who owns the work. Most importantly, the written contract should state that the mentioned person is an independent contractor and not an employee.