Independent Contractor Agreements: What to Include and Why

Before you hire a contractor or start contracting work, you need a proper agreement. Learn what every independent contractor agreement must include to protect both parties.

JustPayStubs Team

Updated February 15, 2026

📋 Always Get It in Writing: A handshake deal with a contractor creates liability for both parties. A proper agreement protects you legally and reinforces the contractor classification.

Essential Elements of Every Contractor Agreement

1. Identification of Parties

Full legal names or business names of both the hiring party and contractor. Include addresses and contact information.

2. Services Description

Be specific. List deliverables, not just general tasks. "Design 5 website mockups" is better than "web design work."

3. Payment Terms

Rate (hourly or project-based), total project fee or hourly cap
Payment schedule (on completion, milestone-based, net-30)
Late payment penalties, invoicing requirements

4. Independent Contractor Status

Explicitly state the contractor is not an employee and is responsible for all taxes on compensation received.

5. Intellectual Property

Who owns the work product? Work-for-hire means client owns everything. License means contractor retains IP and grants usage rights.

6. Termination Clause

Notice period for termination without cause (7-30 days), immediate termination for cause, and what happens to incomplete work.

📌 Tip: You don't need a lawyer for basic contractor agreements. For high-value engagements over $10,000, having an attorney review the agreement is worth the cost.

After the Agreement: Proper Documentation

Issue a 1099-NEC if you paid the contractor $600+. Keep records for at least 4 years.

Create a 1099-NEC for your contractor →

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