An independent contractor agreement is a contract between a business and a self-employed person (or their company) who does a defined piece of work for a fee, without becoming an employee. Small businesses use it for freelancers, consultants, bookkeepers, designers and tradespeople. This independent contractor agreement template is free in Word and PDF, and the most useful thing on this page is probably the section on classification, because the paperwork alone doesn’t decide who’s a contractor.
When do you need an independent contractor agreement?
You need one whenever you pay someone outside your payroll to deliver specific work: a website rebuild, a quarterly tax filing, a marketing campaign, a set of product photos. The agreement pins down what’s being delivered, by when, for how much, and who owns the result.
Hypothetical example: a small bakery hires a freelance web developer to build an online ordering page for a fixed $3,200, delivered in six weeks, with the developer using their own laptop, software and schedule. That’s the classic case for this agreement.
Now picture the same bakery bringing on someone to work behind the counter Tuesday to Saturday, 6 a.m. to 2 p.m., trained on the bakery’s methods, using the bakery’s equipment. Calling that person a contractor and handing them this agreement doesn’t make it true. That job belongs on payroll, with an offer letter or an employment contract.
Does signing a contractor agreement make someone a contractor?
No. The Department of Labor’s Fact Sheet 13 says that agreeing verbally or in writing to be classified as an independent contractor, “including by signing an independent contractor agreement,” does not make a worker an independent contractor under the Fair Labor Standards Act. The Labor Department describes misclassification as treating someone who is an employee under the FLSA as a contractor, which can mean they miss out on minimum wage, overtime and other protections.
The DOL looks at the economic reality of the relationship using six factors: the worker’s opportunity for profit or loss based on managerial skill, investments by the worker and the business, how permanent the relationship is, the nature and degree of control, whether the work is integral to the business, and the worker’s skill and initiative. No single factor decides it. (The fact sheet also notes that the rule behind these factors is being litigated, and points to a 2025 bulletin on the agency’s current enforcement position, so check the page for the latest.)
The IRS has its own test for tax purposes, grouping the evidence into behavioral control, financial control and the type of relationship. It says there’s no “magic” or set number of factors, and that written contracts are one consideration among many. If you really can’t tell, either side can file Form SS-8 to ask the IRS for a determination, though the IRS says that can take at least six months.
If you find yourself writing a contractor agreement that dictates hours, requires the person to use your tools, and has no end date, stop and reconsider. Your state may also apply its own, sometimes stricter, test.
What should an independent contractor agreement include?
Services and deliverables. A clear description of the work, ideally with an attached statement of work. The more specific this is, the fewer arguments later.
Independent contractor status. The contractor decides how, when and where to do the work, uses their own equipment, can work for others, and handles their own taxes and insurance. These statements only help if they describe what actually happens.
Fees and invoicing. Fixed fee, hourly or milestone payments, how to invoice, and how many days you have to pay. There’s a checkbox for whether expenses are reimbursed.
Term and termination. When the agreement ends, and how either side can end it early, with payment for work done up to that point.
Intellectual property. Who owns the finished work. Our template transfers the deliverables to the client once they’re paid for, while the contractor keeps their pre-existing tools and know-how.
Confidentiality, insurance and liability. Mutual confidentiality (with the federal whistleblower immunity notice from 18 U.S.C. 1833(b), which the statute says also applies to contractors and consultants), an optional insurance requirement, and a responsibility clause that doesn’t try to excuse anyone’s gross negligence.
Boilerplate. Entire agreement, changes in writing, governing law, severability, notices and electronic signatures.
How do you fill it in and get it signed?
- Write the statement of work first. If you can’t describe the deliverable, you probably aren’t ready for a contractor.
- Fill in every bracket and choose the payment option that fits.
- Ask the contractor for a Form W-9 as a separate step. It’s how you get their correct taxpayer identification number, and the IRS says to keep it in your files for four years.
- Have the contractor sign first, then countersign as the client.
- Keep the signed agreement and the W-9 together in your records.
E-signing is standard here, and the federal ESIGN Act says a contract can’t be denied legal effect solely because it’s electronic. We’ve written a longer walkthrough on how to e-sign an independent contractor agreement. Download it, fill in the blanks, and send it for e-signature with any tool you like. (This is the job we’re building SignWren to do; you can join the waitlist.)
This page is general information, not legal advice. For a specific worker or dispute, talk to a lawyer licensed where you are.
Template from signwren.com. General information, not legal advice. Check your state's rules and adapt it before you use it.
INDEPENDENT CONTRACTOR AGREEMENT
Before you use this: signing this agreement does not by itself make someone an independent contractor. The IRS, the U.S. Department of Labor and your state look at how the work is actually done. If the client will control the worker's hours and methods like an employee's, use an employment document instead.
This Independent Contractor Agreement ("Agreement") is made on [date] between:
Client: [Client's full legal business name], of [address] ("the Client")
Contractor: [Contractor's full legal name or business name], of [address] ("the Contractor")
1. Services
The Contractor will provide the following services ("the Services"): [short description]. The details, deliverables and deadlines are in the Statement of Work attached as Exhibit A. If this Agreement and Exhibit A conflict, this Agreement controls unless Exhibit A clearly says otherwise.
2. Term
This Agreement starts on [start date] and ends ☐ when the Services are completed and paid for ☐ on [end date], unless ended earlier under Section 9.
3. Independent contractor relationship
The Contractor is an independent business, not an employee, partner or agent of the Client. In particular:
- The Contractor decides how, when and where to perform the Services, as long as the deliverables and deadlines in Exhibit A are met.
- The Contractor supplies their own equipment, tools, software and workspace, unless Exhibit A says otherwise.
- The Contractor may provide services to other clients, including during this Agreement, as long as Section 7 (Confidentiality) is respected.
- The Contractor may hire helpers or subcontractors at their own cost, and is responsible for them.
- The Contractor is not eligible for the Client's employee benefits.
- The Contractor is responsible for their own income taxes, self-employment taxes, business licenses and insurance. The Client will not withhold taxes from payments, and may report payments to tax authorities as the law requires.
Both parties understand that how the relationship works in practice, not this section alone, determines the Contractor's legal status.
4. Fees
The Client will pay the Contractor (choose one):
☐ Fixed fee: [$ amount] for all Services, paid ☐ in full on completion ☐ [percent]% upfront and the rest on completion
☐ Hourly: [$ amount] per hour, up to [number] hours without written approval for more
☐ Milestones: as listed in Exhibit A
5. Invoices and payment
The Contractor will send invoices ☐ monthly ☐ on completion of each milestone ☐ on completion. The Client will pay each correct invoice within [number] days of receiving it. If the Client disputes part of an invoice, it will tell the Contractor in writing within [number] days and pay the undisputed amount on time.
Expenses: ☐ The Contractor pays their own expenses ☐ The Client will reimburse reasonable expenses it approves in writing in advance, with receipts.
6. Ownership of work
Deliverables. Once the Client has paid for them in full, the Contractor assigns to the Client all rights in the final deliverables created specifically for the Client under this Agreement.
Contractor's own materials. The Contractor keeps ownership of tools, code libraries, templates, methods and know-how they owned before this Agreement or developed independently. If any of these are built into a deliverable, the Contractor gives the Client a non-exclusive, perpetual, royalty-free license to use them as part of that deliverable.
Portfolio use. ☐ The Contractor may show the finished work in their portfolio ☐ The Contractor may not, without the Client's written permission.
7. Confidentiality
Each party will keep the other's non-public business information confidential and use it only for this Agreement. This doesn't apply to information that is public through no fault of the receiving party, was already lawfully known to it, or must be disclosed by law (after giving the other party notice where the law allows). These duties last for [number] years after this Agreement ends.
Nothing in this Agreement stops either party from reporting a possible violation of law to a government agency or making disclosures protected by law.
Whistleblower immunity notice. Under 18 U.S.C. 1833(b), an individual will not be held criminally or civilly liable under any federal or state trade secret law for disclosing a trade secret that is made (a) in confidence to a federal, state or local government official, directly or indirectly, or to an attorney, solely for the purpose of reporting or investigating a suspected violation of law, or (b) in a complaint or other document filed in a lawsuit or other proceeding, if that filing is made under seal. An individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to their attorney and use it in the court proceeding, if they file any document containing the trade secret under seal and do not disclose it except under court order.
8. Insurance and responsibility
☐ The Contractor will carry [type of insurance, e.g. general liability or professional liability] of at least [$ amount] during this Agreement and give proof on request.
Each party is responsible for claims caused by its own negligence, wilful misconduct or breach of this Agreement. Neither party is liable to the other for indirect or consequential losses, such as lost profits, except for breach of Section 7 or for gross negligence or wilful misconduct. Nothing in this Agreement limits liability that the law does not allow to be limited.
9. Ending the Agreement
Either party may end this Agreement:
- for any reason, with [number] days' written notice; or
- immediately by written notice if the other party materially breaches this Agreement and doesn't fix the breach within [number] days after receiving written notice of it.
If the Agreement ends early, the Client will pay for Services performed and approved expenses incurred up to the end date, and the Contractor will deliver work completed up to that date. Sections 6, 7 and 8 continue after the Agreement ends.
10. Notices
Notices must be in writing and sent to the addresses above or to an email address a party has designated in writing. A notice is received when delivered in person, on the date shown on an email delivery or read receipt, or three business days after mailing.
11. General terms
- Entire agreement. This Agreement and its exhibits are the complete agreement about the Services and replace earlier discussions and proposals.
- Changes. Any change, including to Exhibit A, must be in writing and signed by both parties.
- Governing law. This Agreement is governed by the laws of the State of [State].
- Severability. If any part is found unenforceable, the rest stays in effect.
- Assignment. Neither party may transfer this Agreement without the other's written consent, except the Client may transfer it to a buyer of its business.
- Counterparts and electronic signatures. The parties agree this agreement may be signed electronically and in counterparts, and an electronic signature has the same effect as a handwritten one.
Exhibit A: Statement of Work
- Project: [name]
- Deliverables: [list each deliverable]
- Deadlines or milestones: [dates]
- Milestone payments (if used): [milestone and $ amount]
- Client contact: [name, email]
Signatures
Contractor
Signature: ______________________________
Name: [full name]
Date: [date]
Client
Signature: ______________________________
Name: [full name]
Date: [date]