Documents for Hiring Florida Independent Contractors
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Objective:
- To obtain the documents necessary for hiring an independent contractor.
Entities:
- Private Individuals
- Sole Proprietorships
- General Partnerships
- Limited Liability Companies
- Corporations
- Non-Profits
- Limited Liability Partnerships
Documents for Working with Independent Contractors
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An independent contractor is anyone separate from your business, such as freelancers or other professionals, that you pay for services despite not being an employee. Many businesses like to hire independent contractors because they provide a great deal of flexibility and don’t require nearly as much paperwork. While you don’t need the usual information to set up payroll taxes, there are still some documents that you’ll want to have in place to protect your business from liability or other penalties.
W-9
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Florida businesses must give any independent contractor that they pay at least $600.00 a year with a Form W-9. This form includes the contractor’s name, address, and taxpayer ID number. You’ll use the supplied information to create a 1099-MISC form for that contractor for that tax year. A 1099-MISC is like the W-2 form you would use for traditional employees.
Your business must have a W-9 for every independent contractor that it hires in order to stay exempt from federal income tax withholding requirements. Keep these documents on file even after the job is complete. Although you won’t need to submit your W-9 to any state or federal agencies, you will need them if you’re ever audited by the IRS. They’re instrumental in preventing employee misclassification as well.
Application, Resume, or Other Documentation of Qualifications
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While you can technically ask a contractor to fill out a job application, it’s not the best option. If you must use a traditional application, make sure that the contractor knows that it is not for a position as an employee. However, you’ll still want to vet their qualifications like you would with any other worker. The contractor likely has a resume or CV that you can review with their work history, education, and other relevant details, which you should ask them for. Don’t just ask for a list of references – actually call them. Depending on your industry, you might also consider performing background checks on your independent contractors. If you pursue this route, though, there are certain guidelines that you need to follow.
A Written Independent Contractor Agreement
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Don’t settle for verbal contracts – when hiring independent contractors, get your agreements in writing. Keep the signed copies with the rest of your company’s other important documents. It can be tempting to use one agreement for every contractor. However, taking the time to draft a different contract for each engagement provides optimal protection to both parties. The specific details of the agreement should be tailored to the individual job, but most independent contractor agreements at least define the scope of the service, who owns the work product, and how the contractor will be financially compensated for the job. For more on what should be included in independent contractor agreements, check out our checklist here.
Other Useful Agreements
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You might want additional contracts in addition to the independent contractor agreement depending on the job. Other agreements to consider include:
Confidentiality Agreements – Also known as nondisclosure agreements, confidentiality agreements are a must-have if the independent contractor is going to have access to any trade secrets or other confidential or proprietary information. These agreements help protect your company from potentially damaging leaks and secure the “secret ingredients” (literal or otherwise) that make your business different from the competition.
Non-Compete Agreements – Non-compete agreements are useful if there’s a risk that the independent contractor could poach some of your employees or customers. Because contractors usually come from different industries than the companies that engage with them, the chances of this happening are low. Still, it’s better to be safe than sorry.
For more on protecting yourself against liability when engaging with independent contractors, schedule a consultation with our business attorney today by calling (727) 279-5037 or visit our flat fee service page.
