Do I Need a Contract?
By Sherril Steele-Carlin
You're ready to hire a contractor, but you're not sure whether to create a contract for your contract professionals. Is it really necessary? Yes, and here's why.
It's All About Protection
Contracts not only protect the independent contractor you want to hire, they protect you, too. Some contractors may not work for you unless you offer them a contract. The contract spells out rights, both yours and the contractor's. It tells your new hire what you expect of them, and spells out their assignments as clearly as possible. It also states the amount you will pay your contractor, and a period for completing the assignment. Contracts also help show that the contractor is just that, and not an employee of your company. This is very important in helping you comply with IRS regulations regarding employees vs. contract workers.
All of this may seem unimportant, especially if you know the contractor, or have worked with him or her before. However, getting things in writing is the best way to ensure the work gets completed on time, to your specifications and satisfaction. You can also specify the exact hours to be worked, or a more general idea of the time needed to complete the project. It's also the best way to protect yourself from unscrupulous contractors you have never worked with before. In addition, if you're hiring a friend as a contractor, getting all terms in writing can prevent the misunderstandings that destroy friendships.
It's the Law
In addition, there are very specific laws about independent contractors and how to define them as opposed to employees. A contract can help you indicate that you are not paying a salary or benefits to the contractor, which can help you stay within the law. You should always consult your attorney and CPA before you write a contract and hire an independent contractor.
So, a written contract may be in your best interest, as well as the best interest of your contractor. Check with your legal department. They may already have a contract you can use, or they should be able to draw one up fairly easily. There are also many sample contracts and discussions of contracts online.