An independent contractor agreement gives the parties clarity and consistency. Without written samples of an agreement between two parties, the parties may assume what is true. Often, these assumptions are incorrect and can lead to legal conflicts later on. People can avoid the potential hassle and confusion by entering into a comprehensive independent contractor agreement from the start.
Importance for Employers
A legally binding agreement protects employers when they hire independent contractors. Employers can reduce overhead for the company by hiring individuals to do temporary, simple, or individual tasks instead of hiring full-time employees to do the same.
Working with independent contractors provides more flexibility for non-essential tasks and a voice committing to a salary when one isn’t necessary. It is easier to terminate contracts when you have a legally binding independent contractor agreement, and it costs less to hire and file taxes on behalf of the individuals.
Importance for Contractors
Independent contractors don’t reap the same benefits as employees when they use an independent contractor agreement, but it nevertheless provides legal protection. As someone who is self-employed, you have a lower tax liability, and you have greater control over your schedule format.
For example, if you decide to work as a massage therapist in a salon, as an independent contractor, you are not supposed to come to work based on the salon schedule. This is strictly against the IRS guidelines. You can tell the employer your desired work schedule, which they can then add to their schedule. If a company tries to abuse your services by asking for things beyond the terms of the services in the agreement, you have the legal recourse to remind them that what they are asking for is outside the scope of the agreement, but you’re happy to renegotiate for higher compensation in exchange for more work.