Engaging an Independent Contractor

HR & Employment Law for Entrepreneurs Series

By Adrienne B. Haynes, Esq.

Managing Partner, SEED Law

Congratulations! You’ve made the decision to engage an independent contractor or review and update your consultant onboarding practices.

Engaging independent contractors is often a signal that your business is growing enough to engage partners and experts. Each independent contractor relationship is different and should be carefully developed from beginning to end. As a company, this requires a diligent review of the distinctions between employees and independent contractors and assurance that the consultants you engage have done what’s necessary to have a foundation for a successful relationship.

The checklist below should help to remain in compliance with federal regulations:

· Make the distinction between independent contractor and employee one more time just to be sure. If you’re not, you can ask the IRS for their opinion in advance.

· Set up a system or process to communicate with contractors, share documentation, progress, needs, or other feedback.

· Update your independent contractor agreement and make sure it accurately reflects the relationship you want.

· Review the contractors set responsibilities and deliverables to outline clear metrics for success

· Set up any access codes, materials, or information the contractor will need from your business to meet their objectives

· Schedule a meeting to get a signed contract and the necessary IRS documentation BEFORE the relationship begins.

· Calendar check in dates to make sure that contract terms are still in place and that metrics will be met

· Work with an external financial professional to review your record keeping and documentation and make any necessary updates

· Calendar an annual review of your department’s documentation and recordkeeping and any changes in the law that may impact the way you do business

This article is an overview of legal considerations and does not cover every legal right or obligation, consideration, exception, or restriction. Every business decision should be well researched and discussed with a professional before being made.

To schedule a consultation with a SEED Law attorney, you can give us at call at (816)945–4249 or schedule your consultation today here.

Additional Resources:

Forms and Associated Taxes for Independent Contractors, https://www.irs.gov/businesses/small-businesses-self-employed/forms-and-associated-taxes-for-independent-contractors (last visited April 10, 2020)

Independent Contractor (Self-Employed) or Employee?, https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee (last visited Apr 12, 2020).

PRESENT LAW AND BACKGROUND RELATING TO WORKER CLASSIFICATION FOR FEDERAL TAX PURPOSES, https://www.irs.gov/pub/irs-utl/x-26-07.pdf (last visited Apr 12, 2020).