What is a freelance contract?
A freelance contract determines working terms between a freelancer [or “contractor”] and a person or company that requires their services. Clearly drafted freelance contract, makes it is for both sides to comprehend what to expect from each other. With the help of mentioned contract, projects get completed and sent in on time and payments are arranged promptly. So, this document is legally binding and it guarantees that each person working on a given task is on the same page in the context of service guidelines.
What are general terms in a freelance contract?
A template for freelance contract normally addresses the following details:
– Project participants’ names
– Information about the services delivered and the anticipations for both parties
– Specific dates for the work
– Terms of payment
– Legal clarification of the contractor’s role
Check out other useful, free, downloadable templates here.
What are other names for freelancer contracts?
A freelance contract is otherwise known as a:
– Client/Service Freelancer Agreement
– Company Contractor Agreement
– Contractor Agreement
– Freelancer Agreement
– Freelancer Contractor Agreement
– Independent Consultant Agreement
– Independent Contractor Agreement
When do you need a freelance contract?
As opposed to a permanent, general work relationship, you need a freelance contract for a single project over a clear time frame. The freelance worker may not be involved by the company as an official part of it. Note that this kind of worker is not the same as a temporary worker, or [temp] which are frequently placed at a company via an independent recruitment agency to fill a position for a brief period of time (such as during an employee’s maternity leave). Temporary workers are technically employees of the recruitment agency, while independent contractors are self-employed.
Download for free template of End user licensing agreement.
An employee generally costs a company more money than independent contractor, because an employee receives traditional work benefits such as: health care, sick pay, vacation pay or retirement.
Independent contractors usually are not expected to come into an office, because they work on their own schedules. Freelance workers have no upward limit on their potential earnings, unlike salaried workers. Freelance workers are expected to pay for out-of-pocket expenses until approved by the company.
Freelancers are responsible for obtaining their own insurance, because a company’s insurance does not cover the contractor’s insurance expenses.
What are consequences of not using a freelance contract?
Note that, expectations of the freelancer and their required services may be unclear if there is not a freelance agreement. It is essential that both an independent contractor and their client have a joint understanding of the scale of the project in order to avoid any confusion or additional work.
In addition, a freelance contract confirms to the Internal Revenue Service (IRS) that the contract worker is not an employee of the company. In other case, the company may become obliged to cover the individual’s social security taxes, Medicare, and also may become responsible for any liabilities that may emerge from the project.
Check out free, downloadable Liability waiver form (Release of liability)
Critical consequences may arise if a freelancer is misclassified as an employee and contrariwise, involving large fines and even potential jail time. It is vital that you comprehend the distinction between an employee and an independent contractor and the implications for yourself/your business.
What are the consequences for the contractor?
– Loss of payment
– Loss of time
– Stolen work
– Freelance workers may expose themselves to incur a fine for not providing accurate earnings information on their personal income tax return
What are the consequences for the recruiting company?
– Loss of money, specifically in unanticipated expenses
– Loss of time
– Legal expenses, including lawsuits
– Breach of company information
A company will receive a 1099 form from Internal Revenue Service, If a freelance worker earns more than $600 from a company. You can find instructions concerning this legal requirement on the Internal Revenue Service’s (IRS) website.
Freelance workers can delegate work to other independent contractors, though, they cannot have employees for themselves.
In order to treat their workers fairly, there are many legal guidelines that a company must be aware of. To be informed about the major employment laws in the United States, visit the Department of Labor’s website, that has a clear explanation of it.
Are you interested what Photo release form is? Click here to get the information and to download free template.
What are common uses of a freelance contract?
There are many kinds of short-term projects that an individual worker can fulfill for a company, therefore, a freelance contract has a wide variety of uses. Below you will read about the situations in which there is a specific task that the client needs the contractor to accomplish:
– When a magazine hires a journalist to write an article
– When a small business recruits a programmer to create a website
– When a theater company hires an actor to perform in a play
– When a think tank hires a speaker to deliver their conference’s keynote address
– When a family hires a pet sitter to watch their dog while they are on vacation
– When a couple hires a photographer for their wedding
– When a company hires a marketing consultant to increase awareness of their brand
– When an office hires a plumber to fix leaky pipes
– When a mother hires the next-door neighbor to watch her child for the evening
– When a student hires a tutor to help them study for the Scholastic Assessment Test (SAT)
There is a huge scope of freelance jobs. Contract workers are an increasing part of the population.
Curiously, nowadays, many independent contractors actually work for a single client, due to work agreements or in-depth projects. However, these works still do not get employee benefits including overtime pay, according to the Fair Labor Standards Act.
Companies basically look to freelance workers for projects that will not need extensive training or utilization of company equipment.
What should you include in a freelance contract?
A freelance agreement should include the following information:
1) The names of the recruiting company and the independent contractor
2) The services that the contractor will deliver to 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? For instance, you may wish to define whether the file should be submitted as a Word or PDF document. Is there a file-sharing website that client prefer to share files with?
– Is there any confidentiality form including non-disclosure agreement? Will the client be given exclusivity to the contractor’s work? Take into consideration that a freelance worker has different intellectual property rights than an employee does.
– What are the client’s responsibilities? Are there guidelines to change the project while in progress, if the client wishes to do so?
– You may wish to involve services that are not provided in order to provide clarity. An explanation of the services that the contractor will provide the client with:
3) Project schedule with specific dates, that is mutually agreed-upon
– Are there multiple deadlines? Is there a specific time the project must be fully completed? Is contractor required to come to particular meetings?
4) Compensation
– What is the amount of money that client will pay to the contractor? What is the rate of payment?
– What is the method of payment and when the client will send the payment?
– Is there a guaranteed baseline payment, in case the project is canceled part of the way through?
5) A clarification of your legal relationship
– Why is the work being completed by an independent contractor rather than by an employee? The clarification helps to show to the Internal Revenue Service (IRS) that the company will not pay for the same work benefits for the contactor as the company would for an employee.
– The contract a legally binding document ensuring that the work gets completed.
– Is the worker at will? Are there any circumstances according which the relationship may be stopped?
Additionally, to signing a freelance contract, it may also be essential for you to sign a non-disclosure agreement.
Below you can download free template of a Freelance Contract in pdf and Word format: