Sheehan & Associates, P.L.C.

Take care when hiring independent contractors for your business

In a nation where the "gig economy" has become the norm, independent contractors are all over -- and smart businesses are taking advantage of all the wonderful talent out there.

However, you do need to take care when you hire an independent contractor to work for your company. While there's a lot less paperwork involved than there is when you hire an actual employee, there are at least three important documents you don't want to skip:

1. A resume

You need to have some documentation on hand to show the qualifications of the person you hired for a job -- just in case that's ever in question. While you probably have your own method of checking the skills of the contractors you hire, you never know when a dissatisfied client might allege that you turned an unqualified "hack" loose on a project.

2. A contract

You need an agreement, signed by both yourself and the independent contractor, that spells out:

  • The nature of the work, including any deadlines
  • What happens if those deadlines are not met?
  • The ownership of any end product (especially intellectual property)
  • The amount of payment the contractor will receive
  • When payment will be made
  • What dispute resolution processes are available if there is a conflict

It may also be necessary to include a confidentiality agreement, depending on the type of work that you are asking the contractor to perform or the nature of your business.

3. The tax forms

You need to issue a 1099 to any contractor that you pay more than $600 in a year, so it's important to have a W-9 form on file. There may be additional state forms that also need to be acquired.

Deciding exactly what to include in your paperwork for an independent contractor can be tricky -- particularly where the contract is concerned. It's often wise to prepare your forms with the assistance of experienced legal counsel. That can save time -- and problems.

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Sheehan & Associates, P.L.C.
1460 Walton Blvd , Suite 102
Rochester Hills, MI 48309

Toll Free: 877-600-7891
Phone: 248-218-1473
Fax: 248-650-5368
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