CocoSign Review: The Ultimate Guide of Hiring an Independent Contractor
A key responsibility of the HR department is recruiting qualified candidates and selecting the right one for the job. However, hiring workers requires numerous steps and considerations, including everything from paperwork to tax obligations. Due to the complexity of this HR procedure and the time, effort, and cost, you might find that hiring independent contractors is better for your business. Here you can find the details about cocoSign review.
The increased use of independent contractors by companies across the globe has led to a shift in how some work roles can be filled. Independent contractors appeal to companies that are trying to manage costs and avoid the stress of legal documents.
When hiring an independent contractor, you’re required to create a legitimate independent contractor agreement. CocoSign is one of the best e-signing sites that offers a simple independent contractor agreement and other templates. Also, there are no charges for signing up on the website to download a contractor agreement.
Here is an ultimate guide to hiring independent contractors. It explains what an independent contractor is, what this type of worker entails, and the small paperwork involved.
What is an Independent Contractor?
An independent contractor is essentially any self-employed individual who provides services from a specific client under agreed terms and conditions. They can also be referred to as freelancers or consultants in many cases and are usually self-employed or may work through an umbrella or management company.
Once contracted to render certain services, independent contractors normally pay their income tax, self-employment tax, social security tax, medical expenses, and other similar taxes via free online tax calculators, tracking expenses, and access to IRS resources, among many other tools.
What is an Independent Contractor Agreement?
An independent contractor agreement is a legal document that outlines the specific terms under which the contractor works for the company. The contract will be limited to the named client and contractor and only for the project’s service duration. Try CocoSign’s independent contractor template and seal the deal with other independent business owners and freelancers.
The agreement should also clearly state how the independent contractor is not an employee of the business—indicating this exempts the business from any legal obligation to the independent contractor that might be due to an employee.
They’re also called: subcontractor agreement, consulting service agreement, general contractor agreement, freelance contract, etc.
When Can One Use an Independent Contractor Agreement?
When hiring an independent contractor and wants to stay on the right side of the law, you must have an independent contractor agreement. This is beneficial for protecting your interests as well as the interests of the independent contractor.
Most freelancers or contractors insist on getting an independent contractor agreement because it clearly outlines their services’ inclusions and exclusions, along with essential details.
What are the Elements of an Independent Contractor Agreement?
The terms of an independent contractor agreement can depend from scenario to scenario. In general, the following are the key components:
Entity: An independent contractor agreement should detail the company’s legal names or the individual obligated to compensate the contractor for its services.
Contractor: Full details of the Independent contractor providing the services is mandatory.
Service: The document should mention the independent contractor provides the service to the contracted company.
Payments: The agreement should state the money to be paid to the freelancer in lieu of their services. It also defines the mode and time to make the payments and if partial-payments are allowed.
Duration: The agreement must include a timeline during which the project should be completed. Further, the inclusion of any milestones in the timeline is required.
Termination: Termination of the agreement should detail if the hiring entity has the power to end the contract at will. What circumstances can lead to the contract termination?
Employee Benefits Exclusion: It is a good idea to state clearly that the independent contractor is not eligible to enjoy the employee perks of the company, such as healthcare, paid leaves, sick days, etc.
Governing Law: Both parties should agree with the laws applicable beforehand. This is especially important if either of the parties decides to sue the other.
Expenses: The agreement should also state if the independent contractor bears their expenses, including a list of the hiring company’s expenses.
Severability: The severability clause states that if any part of the independent contractor agreement becomes invalid, the rest of the agreement is still in effect.
You can add other clauses based on what the hiring company or the freelancer seems necessary. However, any clause in the independent contractor agreement should be agreed upon by both parties.
How to Draft an Independent Contractor Agreement?
A legitimate independent contractor agreement should be well written and comply with legal law. You can consult a legal expert on the same. However, CocoSign provides an easy way out with its customized independent contractor agreement templates perfectly suited for your needs. You can edit and download the free template right away.
Benefits of Hiring an Independent contractor.
If a company hires independent contractors (either working on their own or through a management company), there are certain advantages:
Reducing the risk of permanent establishment: Since an IC is not strictly under the company’s control, there is less chance of establishing a ‘business presence’ through their activities, hence evading certain tax liabilities.
Reduces compliance problems with local employment laws: Having an independent contractor agreement protects the company if any issues arise with meeting local rules.
Low administrative burden: The company does not have to use its resources for understanding and meeting local requirements, such as payroll, tax withholding, and statutory benefits.
Consequences of Not Using an Independent Contractor Agreement
Independent contractor providing services without the agreement can be seen as an employee of the company. As such, for institutions such as the IRS, the hiring company is liable to pay employee benefits to the independent contractor.
Independent contractor(s) does not need to join the office premises to get paid against his services since there are no employees. They need to sign a contract to seal an agreement with the employer but not as an employer but as an independent contractor.