Updated:
An independent contractor agreement is a written contract for freelance services. It sets out the scope of work, the pay, the term and the ways to end the deal. Fill in the free template below online, or download it as a PDF.
Build Your Document
Answer a few simple questions to make your document in minutes
Save and Print
Save progress and finish on any device, download and print anytime
Sign and Use
Your valid, lawyer-approved document is ready
An independent contractor agreement is a contract between a business, called the client or the Company, and a self-employed person or firm that performs services for it in exchange for payment. It names both parties, describes the work and the pay, and says how long the arrangement lasts.
The same document goes by several names: contractor agreement, contract for an independent contractor, freelance contract, subcontractor agreement and consulting services agreement. Many people call it a 1099 contractor agreement, after Form 1099-NEC, the form on which a business reports payments to independent contractors (IRS, Independent contractor defined).
There is no single standard form. The parties choose the clauses that fit their industry and the project, and a signed agreement gives both of them one place to check when a question comes up. A good contractor agreement helps the parties:
The type pages listed above cover common variations, such as the consulting agreement for advisory work. They follow the same structure as this general template.
Use an independent contractor agreement whenever a business pays a self-employed person or company for a defined piece of work instead of hiring an employee for it. Sign it before the work begins, while both sides can still adjust the terms.
Typical situations include:
The IRS lists doctors, dentists, veterinarians, lawyers, accountants, contractors, subcontractors, public stenographers and auctioneers who offer their services to the general public as generally independent contractors, but says the answer depends on the facts in each case (IRS, Independent contractor defined).
Building and repair work for a homeowner can also fall under a state's contractor licensing and home improvement contract rules, which differ by state. In California, for example, the Contractors State License Board guides homeowners in choosing a licensed contractor for home improvement projects (California Contractors State License Board, Hire a Licensed Contractor).
A short written agreement is worth having even for a small job. Terms agreed after the first invoice are harder to settle, and most disputes between a client and a freelancer start with a scope or a price that nobody wrote down.
An independent contractor agreement should include the parties, the nature of the relationship, the services, the payment terms, the term and termination options, confidentiality and ownership of the work, and how disputes are settled.
The sections below walk through these parts of the agreement:
The opening of the agreement names the Company and the Contractor by their full legal or business names and gives the date the agreement takes effect. Add each party's mailing address and email, so notices reach the right person.
A relationship clause then says the Contractor is an independent business, not an employee, partner or agent of the Company. It usually adds that the Contractor decides how, when and where the work is done and brings their own tools and equipment.
These terms should match how the work really runs. A clause on its own does not settle a worker's status: the IRS looks at the entire relationship and the extent of the right to direct and control the worker (IRS, Independent contractor (self-employed) or employee?).
The scope of services describes exactly what the Contractor will deliver, to what standard and by when, so both sides can tell when the job is done. Name the deliverables, their format and the quantity, for example the pages of a website or the rooms of a renovation.
List what is out of scope as well, such as extra rounds of revisions or travel, and say how extra work is priced. When a project has many parts, a separate statement of work (SOW) can hold the details, and the agreement refers to it.
Plan for change, too. Say who can approve a change in scope and how it is confirmed, such as by email from the named contact, so a change never depends on a phone call nobody remembers.
The payment clause sets the rate, whether hourly, a fixed fee or another basis, plus any upfront retainer, and says when each payment is due. Agree on the rate before work starts; reopening it halfway through a project strains the relationship.
Set out the invoice terms: what each invoice shows, where it goes and how many days the Company has to pay it after it arrives. Say who pays expenses such as travel, software or materials, and whether the Contractor needs approval before spending.
Add what happens when a payment is late, for example a pause in the work until the invoice is paid.
The term clause says when the engagement starts and when it ends: on a set date, after a fixed period, when the project is complete, or by automatic renewal for further periods. If the exact length is unknown, give a general timeline and a way to extend it.
Milestones split a longer job into stages, each with a deliverable and a due date, and with an amount where payment follows the milestones. Write what counts as accepted work at each stage and how long the Company has to review it, so both sides know what will be delivered and when.
The responsibilities section lists what each side provides: the Contractor brings the work, tools and staff, and the Company provides access, information and timely feedback. Leave nothing to assumption.
Name one point of contact on each side, especially when several departments take part. Agree how progress is reported, how quickly the Company reviews work and how long approvals for changes take.
If the Company wants the Contractor to carry insurance, such as general liability or professional liability cover, the agreement names the type of cover and the proof the Company expects to see.
The termination clause sets how either party can end the agreement before its term runs out, with or without a stated reason, and how much notice each side gives. It protects both the Contractor and the Company from a worst case.
Common grounds for ending the agreement are nonpayment and a breach of its terms. Say what happens at the end: the final invoice, payment for work done to date, delivery of finished work and the return of the Company's materials and information.
Confidentiality, work ownership and non-compete clauses protect the Company's information and settle who owns what the Contractor creates. They are the clauses most often negotiated.
A confidentiality clause covers business information the Contractor sees during the job; a separate confidentiality agreement can do the same. A work ownership clause says whether the finished designs, code, text or other work pass to the Company on payment, or whether the Contractor keeps them and grants a license to use them.
A non-compete clause is the hardest to agree on, because a contractor's business depends on working for several clients, and some of those clients compete with each other. If the Company asks for one, the Contractor can explain how it would affect other work and propose a middle ground: name the competing activities, the area and a short, realistic period.
Whether a non-compete binds at all depends on state law, which differs from state to state, so check the rule of the state named in Section 11 before relying on one. Virginia, for example, bars an employer from entering into or enforcing a covenant not to compete with a low-wage employee, a term that includes an independent contractor paid an hourly rate below the median hourly wage for the Commonwealth (Va. Code § 40.1-28.7:8).
A non-solicitation clause is narrower. The Contractor agrees not to approach the Company's employees or clients to draw them away during the agreement.
The dispute resolution clause says how the parties settle a disagreement, for example by talking first and then by arbitration, and which jurisdiction's rules govern the agreement. The agreement ends with a signature block for each party, with a printed name and title for anyone signing for a company.
To fill out the FormsPal independent contractor agreement, go through the template on this page from the first page to the last and replace every blank with your own details. The order below matches the order of the pages.
The screenshots under each step show the FormsPal Independent Contractor Agreement template filled with sample entries in blue, so you can see where each answer goes. The names, addresses, dates and amounts are examples only.
Once every blank is filled in, both parties read the whole independent contractor agreement, sign it and each keep a signed copy before any work starts. Work through the steps below in order.
If the terms change later, put the change in a written amendment that both parties sign, and keep it with the original agreement.
An independent contractor controls how the work is done, while an employer has the right to control an employee's work, and the IRS weighs all evidence of the degree of control and independence (IRS, Independent contractor (self-employed) or employee?). The table sets out the main differences.
| Point | Employee | Independent contractor | Source |
|---|---|---|---|
| Control of the work | The employer has the legal right to control what is done and how it is done | The client directs only the result of the work, not what will be done and how | IRS, Independent contractor defined |
| Tax withholding | The employer generally withholds income tax, Social Security and Medicare taxes and pays its matching share | The business generally does not withhold or pay any taxes on payments | IRS, Independent contractor (self-employed) or employee? |
| Year-end tax form | Generally Form W-2 | Generally Form 1099-NEC, box 1 | IRS, Independent contractor defined |
| Self-employment tax | Earnings generally not subject to it | Earnings subject to it | IRS, Independent contractor defined |
| How pay is set | Wages or salary on the payroll schedule | The terms of the agreement: hourly, fixed fee or milestones, paid against invoices | The parties' agreement |
The IRS sorts the evidence of control and independence into three categories: behavioral, financial and the type of relationship (IRS, Independent contractor (self-employed) or employee?).
No single factor decides the question, and the IRS says to look at the entire relationship and to document each of the factors used (IRS, Independent contractor (self-employed) or employee?). When the answer is still unclear, either the business or the worker may submit Form SS-8, and the IRS then determines the worker's status (IRS, Independent contractor (self-employed) or employee?).
The IRS test settles federal tax status only. A state can use its own, stricter test for its labor and unemployment laws: California applies the ABC test under its Labor Code, Unemployment Insurance Code and wage orders, where a worker is an employee unless the hiring entity shows all three of these conditions, or an exemption for certain occupations applies (California Labor Commissioner, Independent contractor versus employee; Lab. Code §§ 2775 to 2787):
Hiring a 1099 contractor comes down to a short sequence: classify the worker, collect Form W-9, sign the independent contractor agreement, and report the year's payments on Form 1099-NEC when they reach the IRS threshold (IRS, Forms and associated taxes for independent contractors).
Before the first job, the business owner decides whether the person providing the services is an employee or an independent contractor for federal tax purposes, using the IRS categories above (IRS, Independent contractor (self-employed) or employee?). The signs below follow those IRS categories and do not settle status under a stricter state test such as California's ABC test (California Labor Commissioner, Independent contractor versus employee). Signs that point to a contractor under the IRS categories include:
Once you have decided the person is an independent contractor, the IRS names the first step: have the contractor complete Form W-9, Request for Taxpayer Identification Number and Certification (IRS, Forms and associated taxes for independent contractors).
The completed form gives the business what it needs for the year-end form:
The IRS says the W-9 should be kept in your files for four years in case of any questions from the worker or the IRS (IRS, Forms and associated taxes for independent contractors). There is no need to send it to the IRS.
If a U.S. contractor has not provided a taxpayer identification number in the manner required, the business must withhold 24% from reportable payments of nonemployee compensation as backup withholding (IRS, Forms and associated taxes for independent contractors).
Sign the independent contractor agreement before work begins, so the scope, the pay and the exit terms are settled in writing for both sides. The free template on this page covers the clauses described above. For a large or unusual project, an attorney can review the draft before it is signed.
For tax years beginning after 2025, a business files Form 1099-NEC for each person not treated as its employee to whom it paid at least $2,000 during the year for services performed in the course of its trade or business (IRS, Instructions for Forms 1099-MISC and 1099-NEC (12/2026)).
The same instructions set January 31 as the date to furnish the contractor's copy and to file Form 1099-NEC with the IRS (IRS, Instructions for Forms 1099-MISC and 1099-NEC (12/2026)). Some payments are exceptions, and the IRS lists them in those instructions (IRS, Forms and associated taxes for independent contractors).
An independent contractor agreement fits a self-employed person doing defined work for a client; when the business directs how, when and where someone works, an employment contract is the closer match. Other documents cover narrower needs.
The most common mistakes in an independent contractor agreement are a vague scope, open payment dates, a non-compete wider than the job, and terms that describe the contractor as if they were an employee. Each one is easy to fix before signing.
These answers cover the questions businesses and contractors ask most often about the agreement, the worker's status and the tax forms around it.
Yes, the two names describe one document, and the 1099 name refers to Form 1099-NEC, on which a business reports payments to independent contractors (IRS, Independent contractor defined). Freelance contract, subcontractor agreement and consulting services agreement are other names for the same kind of document.
If you classify an employee as an independent contractor and you have no reasonable basis for doing so, then you may be held liable for employment taxes for that worker (IRS, Independent contractor (self-employed) or employee?). A worker who believes they were misclassified can use Form 8919 to figure and report their share of uncollected Social Security and Medicare taxes (IRS, Independent contractor (self-employed) or employee?).
Yes, an independent contractor is self-employed, and their earnings are subject to self-employment tax (IRS, Independent contractor defined). Generally, the business does not withhold or pay any taxes on payments to independent contractors (IRS, Independent contractor (self-employed) or employee?).
An independent contractor agreement lasts as long as its term clause says: until a set end date, for a fixed period, until the services are complete, or with automatic renewal for further periods. The FormsPal template lets you check the option that fits and fill in the matching dates.
Change a signed agreement with a written amendment that both parties sign and date. Keep the amendment with the original agreement, so anyone reading it later sees the current terms.
An independent contractor usually works for other clients at the same time, unless the agreement limits it. In the FormsPal template, the non-competition box records whether the parties agreed to such a limit, and the non-solicitation covenant covers approaching the Company's employees and clients. Whether an agreed non-compete binds depends on the governing state's law: Virginia, for example, bars one with an independent contractor paid an hourly rate below the median hourly wage for the Commonwealth (Va. Code § 40.1-28.7:8).
Select Create My Document at the top of the page, answer a few questions and download the finished agreement. You can also download the PDF and fill it in with the online PDF editor, then print it.
General information, not legal or tax advice.
