Entering into contracts is inevitable when you own your own business. Written contracts reduce the risk of legal disputes and ensure all parties are aware of the terms and conditions of the contract.

Entering into contracts is inevitable when you are running a business. A lot of small business owners hire freelancers or independent contractors instead of regular employees. If you hire such an independent contractor, regardless of whether the agreement is put in writing or not, you are entering into a contract. That’s why it’s always a good idea to put the agreement in writing. Written agreements reduce the risk of a legal dispute and ensure that all parties involved are aware of the terms and conditions of the contract.

WHAT CAN A LAWYER DO FOR YOU? Merely putting an agreement in writing does not guarantee that there will be no disputes. In fact, an agreement should be treated as a roadmap to a dispute. That is where the benefits of hiring a lawyer come in. A lawyer can help your business avoid entering into an unfavorable or unfair agreement with an independent contractor while keeping the contract strictly legal. Hiring a lawyer also guarantees that you don’t sign any such independent contractor agreement that puts your business at risk. Lawyers are experienced in digging out potentially problematic clauses and recognizing when any specific terms and conditions need to be included, excluded, or modified.

For example, if you enter into a contract that has no dispute clause, you might find yourself embroiled in an unnecessary lawsuit when arbitration could have taken care of the problem or litigating a dispute in another county or state.

Also, in case you have already entered into a contract, and the independent contractor has breached it, a lawyer can advise you about your options and make sure that you don’t do something outside of legal boundaries.

WHAT YOU NEED TO KNOW ABOUT INDEPENDENT CONTRACTOR AGREEMENTS. Many businesses like to outsource to independent contractors to get additional help, bring in specialized expertise, or fill a particular need. It’s a convenient arrangement since employers don’t have to pay payroll taxes, worker’s compensation, or employee benefits for contractors. However, it must be noted that the IRS is now actively looking for employers who misclassify their regular employees as independent contractors to avoid paying payroll taxes and other dues. That’s why we recommend a written contract. If you are hiring an independent contractor, you should have an agreement that clearly defines all the aspects of the relationship between you and the worker, including letting the contractor know that they will receive a 1099 showing the income they earned.

You should keep in mind that the agreement shouldn’t set specific rules for when and where the contractor needs to work. Don’t try to control the conditions in which the work will get done – a common mistake that can classify the relationship as an employer/employee relationship. Setting deadlines is acceptable but defining where and when the contractor works can cause issues, as they are contradictory to independent contractor constraints.

Also, note that creating this agreement will not give you 100% protection from a misclassification ruling or an IRS audit, but it does provide substantial evidence that you planned to hire a freelancer.

Why does your small businesses need a lawyer to review your independent contractor contracts?

A LAWYER KNOWS WHAT YOU DON’T. Being a business owner, you might see every legal document through the lens of profit and loss. We can review your independent contractor agreements efficiently and quickly, so you can make fast, informed decisions.

A LAWYER IS AN EXPERT ON CONTRACTS. It’s always wise to stick to what you know best. As a business owner, your expertise lies in the sales and marketing sides of things. You should leave the law to the lawyers. Unless you are expert on contracts, agreements, employment issues, or leases, consider hiring a lawyer to review and draft your legal documents.

A LAWYER CAN MAKE SURE YOU ARE NOT GETTING OUTSMARTED. If the independent contractor approaches you with a contract, it is more likely to favor them, as either they or their lawyer drafted the document. This means that there may be several items in that document that could spell severe consequences for your business in the long run. That’s why an independent review is crucial to ensure that the contract protects both parties equally.

A LAWYER WILL MAKE SURE YOU COMPLETELY UNDERSTAND WHAT YOU ARE GETTING INTO. More often than not, contracts are made up of complicated legal jargon that can be difficult for a layperson to comprehend. It’s important that you don’t dismiss that technical legal language by skimming over it. You may not even realize that you agreed to something that may be an issue later. A lawyer will ensure that you understand all the legal terms before you sign the contract. We can point out when a contract doesn’t protect your interests and can advise you on obtaining more favorable terms.

A LAWYER CAN NEGOTIATE THE TERMS OF YOUR CONTRACT. If it turns out that a contract contains unwanted provisions or is missing important terms that could protect your interests, we can work to negotiate better terms. Our goal is to ensure that the final document is fair and mutually beneficial for all parties. We are experienced in effectively negotiating legal agreements, ensuring that a contract can be finalized in a way that best protects your interests.

Give us a call at 253.858.5434 or drop us an email at steve@aitalaw.com to set up an appointment today! We’re here to help!