The Basics: What is a Freelance Contract?
A freelance contract is a document that explains the relationship between a contractor and the company that is hiring them. It sets clear expectations between the two parties for a specific project over a set period of time. This type of document is legally binding and ensures that everyone working on a given task is on the same page in terms of service guidelines.
A freelance contract generally addresses the following elements:
• The names of those involved in the project
• Details about the services delivered and the expectations for both parties
• Specific dates for the work
• Terms of payment
• Legal clarification of the contractor’s role
This document is also referred to as:
• Client/Service Freelancer Agreement
• Company Contractor Agreement
• Contractor Agreement
• Freelancer Agreement
• Freelancer Contractor Agreement
• Independent Consultant Agreement
• Independent Contractor Agreement
When Do I Need One?
You need a freelance contract for a single project over a clear time frame, as opposed to a permanent, general work relationship. A company also may not involve the freelance worker as an official part of the company. Note that this type of worker is not the same as a temporary worker, or “temp,” which are often placed at a company through an independent staffing agency to fill a position for a short period of time — such as during an employee’s maternity leave. Temporary workers are technically employees of the staffing agency, whereas independent contractors are self employed.
A company’s insurance does not cover the contractor, making freelancers responsible for obtaining their own insurance. The Consequences of Not Using This Document Without a freelance agreement, expectations of the freelancer and their required services may be unclear. It is imperative that both an independent contractor and their client have a common understanding of the scope of the project so as to avoid confusion or extra work.
In addition, a freelance contract establishes to the IRS that the worker is not an employee of the company. Otherwise, the company may be expected to cover the individual’s Medicare and social security taxes, as well be responsible for as any liabilities that may arise from the project.
Consequences for the contractor
• Loss of payment
• Loss of time
• Stolen work
• Freelance workers may incur a fine for not disclosing accurate earnings information on their personal income tax return Consequences for the hiring company
• Loss of money, particularly in unanticipated expenses
• Loss of time
• Legal expenses, including lawsuits
• Breach of company information
The Most Common Uses
A freelance contract has a wide variety of uses. There are many types of short-term projects that an individual worker can complete for a company. These are situations in which there is a specific task that the client needs the contractor to complete.
• A magazine hires a journalist to write an article
• A small business hires a programmer to create a website
• A theater company hires an actor to perform in a play
• A think tank hires a speaker to deliver their conference’s keynote address
• A family hires a pet sitter to watch their dog while they are on vacation
• A couple hires a photographer for their wedding
• A company hires a marketing consultant to increase awareness of their brand
• An office hires a plumber to fix leaky pipes
• A mother hires the next-door neighbor to watch her child for the evening
• A student hires a tutor to help them study for the SAT
What Should Be Included?
A freelance agreement should detail the following specifications:
- The names of the hiring company and the independent contractor
- The services that the contractor will provide the client
•What components must be included? What is the scope of the project? What does it seek to accomplish?
•How will the work be submitted? You may wish to specify whether the file should be submitted as a PDF or a Word document, for example. Is there a file sharing website the client wishes to use?
• Is there a non-disclosure agreement or an expectation of confidentiality? Will the client be granted exclusivity to the contractor’s work? Note that a freelance worker has different intellectual property rights than an employee does.
• What are the client’s responsibilities? Are there guidelines for if the client wishes to change the project once it is underway?
• You may wish to include services that are not provided in order to ensure clarity.An explanation of the services that the contractor will provide the client:
- Mutually agreed upon project schedule with specific dates
• Are there multiple deadlines? Is there a certain time the project must be completely finished? Does the worker need to come to particular meetings? - Compensation
• How much will the client pay the contractor? What is the rate of payment?
• How and when will the client send the payment?
• Is there a baseline payment guarantee should the project be cancelled part of the way through?
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