What Should an Independent Contractor Agreement Include?

The short answer

An independent contractor agreement is the written deal with a person who works for your business but isn’t your employee. It should cover the scope of work, pay, deadlines, confidentiality, who owns the work, insurance, and how either side can end it. The contract helps, but it doesn’t decide whether someone is truly a contractor. The IRS and the Department of Labor (DOL) look at how the work really happens.

What this tells Google and AI

A contractor agreement doesn’t send a search signal, so this is a Foundation step. It matters because contractors often build the things search engines read: your website, photos, blog posts, and listings. If the agreement doesn’t give your business ownership of that work and the accounts behind it, a falling out can leave you unable to update or keep content that Google, Bing, and artificial intelligence (AI) tools use to describe you.

What this means

The agreement should cover:

• Scope: the specific project or results, not day-to-day duties
• Pay: a project price or rate, how invoices work, and when you pay
• Deadlines: when results are due
• Independence: the contractor sets their own methods and hours, and uses their own tools
• Confidentiality: what they must keep private (see 6.2.8 Confidentiality Obligations)
• Ownership: your business owns the work product once paid for (see 6.2.7 Intellectual-Property Ownership)
• Insurance: what coverage they carry (see 11.2.6 Insurance Certificates from Vendors)
• Compliance: they follow the law, hold needed licenses, and handle their own taxes
• Access: which accounts they can use, and that access ends when the work ends
• Ending the deal: notice, final payment, and handing over files

Made-up example: Lakeshore Dental hires a freelance photographer for office and team photos. The agreement sets a flat fee, a delivery date, a shot list, and a clause that Lakeshore owns the photos and can use them on its website, Google profile, and ads. The photographer uses their own camera and decides how to shoot.

Why it matters

• Misclassification is expensive. The IRS says a business that treats an employee as a contractor without a reasonable basis may owe employment taxes for that worker.
• The contract isn’t the test. The IRS weighs behavioral control, financial control, and the type of relationship. A written contract is only one factor.
• The DOL uses its own test. Its proposed rule, announced February 26, 2026, uses an “economic reality” test focused on the worker’s control over the work and chance for profit or loss. The DOL says it is no longer applying its 2024 rule in investigations. Check the DOL’s page for whether the new rule has been finalized.
• States have their own tests. Some are stricter than the federal ones, especially for unemployment insurance and workers’ compensation.
• Without an ownership clause, you may not own the work. The U.S. Copyright Office explains that a contractor’s work counts as a “work made for hire” only in narrow cases, with a signed written agreement. Otherwise the person who created it is the author. Ask your attorney how to word the transfer.

Who this applies to

Any business that pays individuals who aren’t employees: freelancers, consultants, designers, writers, and specialists. Businesses hiring other companies should also see 11.2.1 Vendor Agreement and 11.2.3 Subcontractor Agreement.

How to do it

1. Decide whether the role is truly a contractor role before you write anything (see 23.3 Employee or Contractor).
2. Describe the results you want, not how to do the work hour by hour.
3. Set pay by project or milestone where possible.
4. Add confidentiality and ownership clauses. Have an attorney word the ownership clause so it transfers rights to your business.
5. Ask for proof of insurance and licenses where the work calls for them.
6. Collect tax forms before the first payment. Get a Form W-9 and check your information-return filing duties (see 10.3.5 Information Returns).
7. Give limited, separate logins. Never share your own password (see 11.7.6 Least Privilege Access).
8. Sign before work starts, and keep a copy.
9. Remove access and collect files when the work ends (see 11.7.7 Removing Access When People Leave).

What proof to keep

• The signed agreement and any changes
• Form W-9 and information returns filed
• Invoices and payment records
• Insurance certificates and license copies
• A record of the work product delivered and where it’s stored
• Notes on how the work was actually done, if classification is ever questioned

Common mistakes

• Treating a contractor like an employee: set hours, a company email title, training, and close supervision.
• No ownership clause. You paid for the logo or website, but you may not own it.
• Sharing your main login instead of creating a separate one.
• Paying before getting a W-9.
• Using a template from another state with a different classification test.
• Keeping a “contractor” for years doing the same core work as employees.

When to get help from a pro

Attorney: to draft the agreement and review classification. CPA: for tax forms and filings. Questions to ask:

• Does this role pass the IRS, DOL, and my state’s tests for a contractor?
• Does my ownership clause actually transfer the rights I need?
• What tax forms must I collect and file for this person?

Bill’s note

[Bill: add a short note. For example, how SiteSmarty works with freelance designers or writers, and what you put in place so the work and accounts stay with the business.]

How I did this for SiteSmarty

• [Date I did this:]
• [What I actually did, step by step: the agreement I used, the ownership clause, and how I set up access]
• [What it cost and how long it took:]
• [What surprised me or what I’d do differently:]
• [Screenshot or photo to add, with private info blurred: the ownership clause in a signed contractor agreement]
• [Result so far:]

Questions people ask

Does a contract make someone a contractor? No. The IRS and DOL look at how the work is really done. The contract is only one factor.

What test does the IRS use? It looks at behavioral control, financial control, and the type of relationship, and weighs all the facts together.

Who owns work a contractor creates? Often the contractor, unless a written agreement transfers ownership to you. Have an attorney word that clause.

What should I collect before paying a contractor? A signed agreement and a Form W-9. Then check your information-return duties with your CPA.

Audit check

• Question: Does every independent contractor have a signed agreement covering scope, pay, confidentiality, ownership, insurance, and compliance, and does the actual working relationship fit contractor status?
• Pass looks like: Signed agreement before work, W-9 on file, ownership clause, separate logins, and a relationship based on results rather than control.
• Fail looks like: No agreement, no ownership clause, shared passwords, or a “contractor” managed like an employee.
• Evidence to collect: Agreements, W-9s, information returns, insurance certificates, and the access inventory.

Where this fits

Do this first: 23.3 Employee or Contractor, 11.2.1 Vendor Agreement

Do this next: 11.2.3 Subcontractor Agreement

Related pages: 6.2.7 Intellectual-Property Ownership, 6.2.8 Confidentiality Obligations, 10.3.5 Information Returns, 11.2.6 Insurance Certificates from Vendors, 11.7.6 Least Privilege Access, 11.7.7 Removing Access When People Leave

Sources

• Internal Revenue Service (IRS), "Independent contractor (self-employed) or employee?" (checked October 17, 2026)
• U.S. Department of Labor, Wage and Hour Division, "Notice of Proposed Rule: Employee or Independent Contractor Status" (2026 rulemaking) (checked October 17, 2026)
• U.S. Copyright Office, "Circular 30: Works Made for Hire" (checked October 17, 2026)

This page explains general rules and Bill's own experience. It is not legal, tax, or insurance advice. Talk to a qualified professional about your situation.