One of the most common issues facing small businesses is how to govern relationships with independent contractors (ICs). Which is not really surprising, since many small businesses use ICs to perform critical work functions like website development, marketing, bookkeeping and other important functions that keep your business functioning and growing.

To protect your company’s future, you must have written agreements in place with each IC you hire – yes, even if it is your best buddy from college performing the work. Here are the key terms you want in your IC agreement:

• Full description of the services being provided by the IC
• Description of payment terms, including fixed fee or hourly, how and when payment is rendered
• Description of how out-of-pocket expenses will be handled
• Detail of what materials or equipment will be furnished by the company vs. what the IC will supply, including office space
• Statement that agreement constitutes an IC relationship
• Statement that the IC has the proper licenses and permits to perform the work you are contracting for
• Statement that IC is responsible for paying their own state and federal income taxes
• Statement that IC will not receive any benefits you provide employees
• Statement that IC carries the necessary liability insurance
• Set terms of the agreement
• The terms by which the agreement can be terminated by you or the IC
• The terms by which you and the IC will settle any disputes
• If applicable, an ownership of intellectual property clause that the work or product you are contracting for belongs to you
• Indemnification clause that states the IC indemnifies you for any violation of patent, trademark or intellectual property infringement by the IC

We can help you develop a written independent contractor agreement as well as other written agreements you should have in place that govern your relationships with employees, vendors and customers.

Contact a Family Business Lawyer™ to schedule your comprehensive LIFT™ (legal, insurance, financial and tax) Foundation Audit, so we can advise you on the proper use of written agreements to keep your company protected through effective risk management.