Why You Need a Contract as an Independent Contractor

Sometimes the legalities of doing business as an independent contractor can seem daunting. But don’t be overwhelmed. It’s not hard to make a contract at all. A contract can be very simple or very complicated (it’s up to you), but the important point is that you do have one. Many of the reasons you need a contract as an independent contractor are listed below, but take note that this list is not exhaustive. You can likely think of some additional reasons on your own.

Reasons You Need A Contract

• To Avoid Misunderstandings – Having a contract to look at when a gray area comes to light about what is expected, can help you avoid costly misunderstandings of what is supposed to be accomplished during the relationship.
   
• To Define the Relationship – While you can’t make a contract stating someone is an independent contractor then treat them like an employee, this can help both parties understand more their roles and place within the work.
   
• To Institute a Description of Responsibilities – If both parties have a good description of what each is to do, when they are to do it, how the deliverables should look and who is going to do what, this can help create a well-oiled machine for your business processes.
   
• To Bind Each Party to Their Particular Duties – If everyone knows what they are supposed to do, the work will go much more smoothly. Define deadlines, the work, and more in this part of your contract to ensure that everyone is on the same page.
   
• To Establish a Time Frame for the Work – Avoiding scope creep is an important part of a contractor’s job. Giving all work a time frame will help avoid problems. You may want a contract for a year for ongoing work, or even an unlimited contract that gives information about what to do if you go over the specified work.
   
• To Help to Secure Payments – Contracts can set in stone the payment you’re expecting and give you recourse if something goes wrong with the payment or work.
   
• To Provide Recourse If Problems Develop – When anything goes wrong, each party can go back to the contract to identify the issue and find the solution to resolve it.
   
• To Establish Professionalism – When you set up a contract and have procedures identified and processes established, you look more professional and people will take your business more seriously.
   

Contracts are an important part of doing business and can help protect both parties from issues that may arise during the course of the relationship. Not only will the contract help, but the process of creating the contract between the parties can help establish the relationship better. Developing clear, collaborative contracts helps ensure compliance and a great relationship today and in the future.

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