Independent Contractor Agreement (1099)

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An independent contractor agreement is a contract between a client that pays a 1099 contractor for their services. An independent contractor is not an employee. Therefore, the client is not responsible for tax withholdings or health benefits. In most cases, an independent contractor is paid on a per-job or percentage (%) basis, not by the hour ($/hr).

Table of Contents

Basic Versions (2)

Simple Independent Contractor Agreement

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Comprehensive Independent Contractor Agreement

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By State

By Profession (26)

By Type (10)

What is an Independent Contractor?

An independent contractor is classified by the IRS, under 26 CFR 31.3121(d)-1, as someone who conducts the following activities:

  • Able to control how their services are completed;
  • Able to work their own schedule and hours;
  • May control their work attire;
  • Salespersons paid solely on commission (except insurance salespersons);
  • Uses their own tools and equipment when performing services; and
  • Part-time corporate officers.

Ultimately, an independent contractor is an individual who has their own boss and sets their own rules to justify how they work and their output. Generally speaking, if an individual is paid on a per-project or task manner, they will most likely be considered an independent contractor. If the individual is paid a salary, must adhere to a specific schedule, and is dictated what to do in every facet of their workday, they will most likely be considered an employee.


Independent Contractors: By Right (IRS)

Specifically, the following professions are independent contractors by right under IRS Rules:

  • Physicians;
  • Lawyers;
  • Dentists;
  • Veterinarians;
  • Construction contractors;
  • Public stenographers; and
  • Auctioneers.

How to File Taxes

Independent contractors must use IRS Form 1099 – MISC and file at the end of the year to file their taxes with the Internal Revenue Service (IRS).

How to Hire an Independent Contractor

Once an individual or company has decided that services are needed, they will need to determine which independent contractor works best for them. Once a contractor is found, it is time to write an agreement.

Step 1 – Independent Contractor Completes IRS Form W-9

IRS Form W-9 should be given to the independent contractor and have completed before signing any agreement. This will identify themselves and require to give their Employer Identification Number (EIN) or Social Security Number (SSN) before performing any work.

This form is required to be stored by the client for a period of four (4) years although is not required to be filed with the IRS.

Step 2 – Verify the Contractor

Before hiring the services of a third (3rd) party, it’s best to verify the credentials of the individual or business by looking up all reviews, past work, along with conducting necessary background checks.

  • Business Entity

For entities, it’s a bit harder to perform a background check. The best way is to simply conduct a search on Google and try to view any negative results. To ensure the entity is valid to do business in the State where the services are being performed a check on the Secretary of State (Search By State).

Websites like Yelp, RipOffReport, Facebook,, and TrustPilot are great resources for viewing a customer testimonials.

  • Individual

It’s best to conduct a criminal background check and check with past references to verify the character of the person. For past employment, use LinkedIn as a means of viewing past employers. If agreed by the contractor, the past employers should be contacted in an effort to get to know their integrity and work ethic.

Step 3 – Negotiate with the Contractor

Once the contractor has been vetted and qualified, it’s not time to discuss the terms of service. This should include:

  • Payment;
  • Term;
  • Scope of Work;
  • Responsibilities;
  • Confidentiality;
  • Non-Compete;
  • Liability; and
  • Insurance

After a verbal agreement has been reached, the parties can decide to authorize a work order or to move straight to a binding written independent contractor agreement.

Step 4 – Completing the Form

Download: Adobe PDF, Microsoft Word (.docx), or Open Document Text (.odt)

Use the template and write yourself or seek legal counsel. After the parties have filled-in the document and completed it is now ready to be signed.

Step 5 – Signing the Agreement

The agreement should be signed by all the parties in the presence of a witness or notary public (or both). In addition, the form should be initialized on the bottom of every page to mark that each item of the contract has been agreed upon by all of the parties.

At this time, the contract is finalized and legally binding to both parties.

Step 6 – File IRS Form 1099

If payment to the independent contractor is more than $600 over the course of a calendar year, the client will be required to file IRS Form 1099 with the Internal Revenue Service (IRS) when they pay their taxes on April 15.

State Definitions (Laws)

Video: How to Make an Independent Contractor Agreement

How to Write

Download: Adobe PDF, MS Word (.docx), OpenDocument

Step 1 – Execute An Independent Contractor Agreement With The Template On This Page

When it is time to issue and execute an agreement obligating an Independent Contractor and Client to their respective roles regarding a project and payment, seek out the three buttons below the presented preview image on this page. Notice that three types of files make up the designations for these buttons. Simply click the namesake of the file version you wish to work with. The desired agreement may also be obtained using the “Adobe PDF,” Microsoft Word (.docx),” or “Open Document Type” links in this section.


Step 2 – Submit The Client Identity And Mailing Address

Once you have opened the agreement using the appropriate editing software, seek out the first article where information must be declared. Here, in “I. The Parties,” we will discuss the Independent Contractor and the Client participating in the work contract being documented. The bold label “Client” introduces this section with a need to fully identify the Party who agrees to pay the Independent Contractor a set sum of money in exchange for the completion of a project, task, job, or production. Record the Client’s full name on the first blank line after this label then record the first line of his or her official mailing address on the second blank line. 

The next two available spaces in this statement shall seek a completion of the address you began. Thus, enter the city and state where the address you entered is located on the blank lines after the term “City Of” and “State Of” (respectively). 


Step 3 – Identify The Contractor Being Commissioned Through This Document

The statement in “I. The Parties” will continue with another labeled area. Here, we will make a production of the Independent Contractor intent on accepting the responsibility of working on the Client project, assignment, or production as a non-employee or Independent Contractor. This Party’s full name should be recorded on the first empty line after the bold word “Contractor” while the first line in the Contractor’s address should be placed immediately after the term “…With A Mailing Address.”    Next, complete the Independent Contractor’s mailing address by entering the appropriate city and state across the next two available lines. 


Step 4 – Declare The Active Or Effective Date Applying To This Agreement

The statement in the first item (“I. The Parties”) shall conclude its declaration with the exact calendar date that both the Contractor and Client wish this agreement to become effective. Generally, this will be the same calendar day when both these parties sign this document to execute however, you may delay the effectiveness of this agreement to the near future. The effective date should be recorded as a month, calendar day, and two-digit year across the lines between the word “…Effective” and the term “…Under The Following Conditions” Note, you may not use an effective date that precedes or is earlier than the signature date of this document since both Parties must formally acknowledge and accept its contents by signature before it becomes a contract.   


Step 5 – Set The Service Or Production As A Prerequisite For Payment

This agreement must also supply documentation detailing why the Client is hiring the Independent Contractor. That is, describe work must the Independent Contractor perform to receive the Client’s payment. This will be handled by the second article (“II. The Services”). The set of empty lines in this section are reserved for your summary of the project, work, or production the Independent Contractor must engage in or complete to the Client’s satisfaction. Refer to your references, then enter this information directly to these blank lines. 

Step 6 – Furnish The Rate At Which The Contractor Will Be Paid

The Independent Contractor’s compensation for the work defined in the previous article must be documented in “III. Payment” to the satisfaction of the Independent Contractor and Client. This article will present a list of checkboxes to enable a quick to produce and easy-to-read manner of documentation – keep in mind only one of the checkbox options in “III. Payment”  may be selected to apply. Thus, if the Independent Contractor will be paid per hour, then mark the first checkbox and enter the dollar amount the Client will pay the Contractor for each hour of work, otherwise leave this selection unmarked.   

If the Contractor’s pay will be submitted in exchange for each contractor-provided service, then mark the second checkbox option and record the dollar amount to be paid for each service on the blank line this choice contains. Another common method of payment is by a predetermined commission. If the Independent Contractor will be paid by commission then select the third checkbox. A pair of blank lines attached to this option will need your report on what the commission consists of. Make sure to record the specific percentage defining the commission and what that percentage applies to. The final choice in this section allows you the freedom to define how the Independent Contractor’s compensation will be calculated. If none of the previous three statements are accurate descriptions of this process, then you must mark the last option (“Other”) then directly provide the rate of pay to the blank lines provided.


Step 7 – Define When The Client Will Pay The Contractor

The next area that requires your attention in “III. Payment” focuses on the frequency of the Client’s payments to the Independent Contractor. Note that in many cases this frequency must logically complement the pay rate. This area will also require that only one option is applied. Thus, seek out the statement “The Contractor Agrees To Be Paid” then review the checkbox statements provided. If the Independent Contractor should expect to only be paid once all the work has been completed, then mark the checkbox corresponding to the statement “At Completion Of The Services Performed.”If there will be a set frequency of payment during the time spent on the job, then we must document it here. Thus, mark the second checkbox option then check the box corresponding to the choices it presents by marking the box preceding “Weekly,” Monthly, “or “Quarterly.” This statement will also require you to produce the first calendar date when the Independent Contractor will be paid on the blank spaces concluding it. If neither of these represents how often the Contractor will be paid, then mark the final checkbox and define this frequency by entering it directly on to the blank line provided.


Step 8 – Confirm The Completion Date Expected By The Client

The agreement item we will attend to is labeled “IV. Due Date.” This will enable you to define exactly how or when the job being discussed will be considered completed. If the Client will apply a due date then, mark the first checkbox. This statement will need to have the expected date of completion entered (see the example below). Otherwise, if no due date or specific definition of completion will be applied then, mark the second checkbox. In a case where a specific set of criteria is applied to define the job’s completion then mark the third checkbox and report this directly onto the blank line provided.    


Step 9 – Discuss How Project Expenses Will Be Handled By These Parties

Locate the fifth article “V. Expenses,” where the costs that are incurred for the sake of the project’s completion will need to be assigned to one of these parties. If the Independent Contractor will assume the responsibility of paying for the project’s expenses, then mark the first checkbox statement (“Responsible For All Expenses…”). If the first option has not been selected in “V. Expenses,” then you must mark the second checkbox which will obligate the Client to reimburse the Independent Contractor for the expenses that you list on the blank line displayed.


Step 10 – Name The Contractor’s Insurance Obligations

In addition to project expenses, the Independent Contractor may be required to carry liability insurance and cross-liability insurance. If this is the case, the first checkbox in “VI. Liability Insurance (Minimum ($) Amount)” must be selected and the “…Amount OF Combined Single Limit…” coverage must be recorded on the empty line with the dollar sign.  If, however, the Independent Contractor will not be required to hold a minimum amount in liability or cross-liability insurance then select the second option to indicate this. In the example below the Independent Contractor will not be required to carry a minimum amount covered in liability/cross-liability insurance policy. 

Step 11 – Indicate The Decided Method Of Termination

It will be important to solidify how this agreement should successfully terminate. This will give both Parties the structure to know when to end the service arrangement we are discussing. Section “VII. Termination” will present three checkbox statements that serve to define the action of terminating this working relationship. If this service contract will only be considered fulfilled at the time the Independent Contractor has provided all the requested services, then mark the first checkbox.If a specific calendar day shall mark the time of termination for this working arrangement, then mark the second checkbox in this section and supply the termination date.

If another method must be used to determine whether this contract has been completed and should end will be employed, then mark the “Other” checkbox. You must define the manner of termination on the blank line provided in this section.


Step 12 – Report On The Termination Options Available

Sometimes one or both parties may need to end such a work agreement prematurely. Whether this is allowed and how it should be done if it is will need to be documented in this contract before we proceed. If either the Independent Contractor or the Client will retain the right to end this contract and thus the exchange being documented, then mark the first checkbox statement in “VII. Option To Terminate.” Additionally, make sure to report the number of “…Days’ Written Notice” the Terminating Party must submit to the Remaining Party on the blank line in this choice. In the example below, either the Contractor or Client may terminate this agreement provided 15 days’ notice is submitted. Otherwise, mark the second checkbox. The second checkbox will state that only the reasons defined in the previous section will allow this contract to terminate.


Step 13 – Record The Jurisdiction Applying Authority To This Document

This agreement will present a considerable amount of language set as its contents. These terms will be enforceable by a specific State Jurisdiction. Name this state on the blank line presented in the section designated as “XX. Governing Law.” 


Step 14 – Additional Content May Be Furnished To This Contract As Needed

If the Independent Contractor and the Client have agreed to “Additional Terms And Conditions” then document all such material in the twenty-third article (“XXIII. Additional Terms And Conditions”). A few blank lines have been supplied for your use. 

Step 15 – A Dated Signature From The Client Must Be Supplied To Begin Executing It

After completing this paperwork, the Client should be given ample time to review its contents as well as those of any attachments. If he or she intends to honor this agreement, then the Client must sign the “Client’s Signature” line and enter the current calendar “Date” underneath the section titled “XXIV. Entire Agreement.”   After signing his or her name the Client must supply the printed version of his or her signature on the “Print Name” line.


Step 16 – The Contractor’s Signature Area Must Be Completed To Finalize This Agreement

The Independent Contractor must also be given enough time to carefully review the content you supplied to articles I through XXIV. If this material is an accurate representation of the Independent Contractor’s intentions, then he or she should solidify this agreement by signing the “Contractor’s Signature” line. Once done, the Independent Contractor must record the “Date” he or she signed this document on the adjacent space. The “Print Name” line beneath the Independent “Contractor’s Signature” expects the Contractor to print his or her name after signing and dating this document.