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What should be included in your contract as a freelancer or independent contractor

23 April 2011

Photo: Wikipedia Commons

Ready to freelance or offer your services as an independent contractor? Before you do, you should know you must get proper tax registrations, business and occupational licenses, and permits from federal, state and local governments to legally operate

While a standard contract agreement for your services isn’t required by law, it should nonetheless be employed to protect both yourself and your client(s). It also adds credibility and continuity to your services and compensation.

Benefits

Probably the biggest benefit of a written contract is that is provides explicit proof of your agreement with your client(s). If trouble arises down the road, the contract can be relied upon to legally resolve disputes.

A freelance contract can also assist you at tax time. If the IRS or your state tax agency questions your employment as a freelancer or independent contractor, you could spend extra time and money trying to prove you’re not an “employee” for tax purposes. A contract can serve as documented proof of your independent contractor status, particularly where this is a history of such contracts.

Creating a contract is not as difficult as you might think, but if you are uncertain about your specific type of business or service, it might be prudent to contact an attorney specializing in such matters. For tips on locating and dealing with attorneys, please see How to Find Legal Representation for Your Business from www.Business.gov.

Terms

Common ingredients of a basic freelancer contract are those that you usually discuss up front verbally with your client. Following is a list of suggestions of information to include in your contract template:

  • Contact Information – This seems obvious, but for legal reasons, correct contact information—including correct names and spellings—must be included. Also include business name, address, phone, and an email address for both you and your client.
  • Job Description – Specifically detail the job, project, or service description, including precise information regarding what the client is getting and not getting. It’s important to document the mutual agreements to ensure both you and your client are on the same page.
  • Chronology – Document the contract dates of service: when it becomes effective, and when it ends. Additionally, you’ll want to note all other benchmark dates, such as draft and completion dates. You might also include a “buffer date” to leave extra time at the end of a project in the event you are running late on completion.
  • Compensation – Record pay rates for the project, which are most often reflected in an hourly or flat rat. If you are charging by the hour, include an estimate of the total cost broken down by hours or other time interval. Also, document who’s paying for materials and other expenses.
  • Invoicing – State when an invoice will be produced and what its terms are (for e.g.: “net 30,” which means “pay the invoice within 30 days.”) Additionally, state whether or not penalties will be assessed for late payment, and what those penalties will be.
  • Ownership – Who owns the final rights to the product or service? A statement of ownership and any rights arising should be included.
  • Cancellation / Dissatisfaction – Explicitly state what will occur in either of these events, or in any other type of event that might interrupt contract fulfillment (such as natural disasters).

When both or all parties are in mutual agreement over the contract’s terms, all parties must execute (sign) and date the document to ensure it’s legally binding on all involved.

Please note that I am not an attorney and this article is not to be construed as legal advice. If you need legal advice, please contact an attorney licensed in your state.

Source: www.Business.gov

For more info:
Becoming a Freelancer – Assessing your Readiness to Be your Own Boss and Tips for Getting Started

How to Become (And Stay) Self-Employed, According to the Law
Getting your Customers to Pay-Up: Part 1 – Tips for Protecting Yourself from Non-Paying Clients
Getting your Customers to Pay-Up: Part 2 – Tips for Protecting Yourself from Non-Paying Clients

Sami Hartsfield

  

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 Copyright 2011 Sami K. Hartsfield – All Rights Reserved

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One Comment
  1. This Blog Had A key Ingredient in making me a better person . Thank you so much for your information . I like how you discribed everything in detailed form

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