Handbook / Contracts and proposals

Independent contractor agreements: the clauses that protect a freelancer

An independent contractor agreement sets out the terms between a client and a self-employed person who does work for them. For a freelancer, it is the document that turns "we agreed on a call" into something both sides can point to when memories differ. This guide explains the clauses that matter most for a one-person business. It is general information, not legal advice; contract law varies by state, and significant contracts deserve a lawyer's review.

The relationship comes first

Before clauses, consider the relationship. The IRS general rule is that an individual is an independent contractor if the person paying has the right to control or direct only the result of the work, not what will be done and how it will be done. It adds that if an employer-employee relationship exists, regardless of what it is called, the person is not an independent contractor.

So the agreement should describe, and the working arrangement should reflect, a contractor relationship: you decide how to do the work, use your own tools, set your own hours within the deadline, and can work for other clients. A contract that calls you a contractor while the client controls your schedule and methods does not change the reality.

Master agreement plus scope

Many freelancers use a two-part structure:

• a master agreement with the general terms that apply to all work for that client
• a scope document or statement of work for each project, with deliverables, price and timeline

This avoids renegotiating everything for every project.

Clauses to include

Parties. Legal names and addresses of both sides, and your business name if you use one.

Services and scope. A reference to the attached scope, or a clear description of the deliverables and exclusions.

Timeline. Start date, milestones, delivery date, and dependencies on the client providing material or decisions.

Fees and payment. Price or rate, deposit, invoicing schedule, payment due dates, accepted methods, and any late payment terms permitted where you work.

Expenses. Whether expenses such as travel or materials are billed separately, and whether they need prior approval.

Changes. How out-of-scope requests are quoted and approved before work begins.

Ownership and licences. When ownership of deliverables passes to the client, commonly on full payment, and what you keep, such as pre-existing tools, templates and know-how, with a licence for the client to use them within the deliverable. Whether you may show the work in your portfolio.

Confidentiality. What information is confidential, how it is protected, and for how long.

Independent contractor status. A statement that you are an independent contractor responsible for your own taxes, insurance and equipment, consistent with how the work actually happens.

Termination. How either side can end the agreement, the notice required, and payment for work done up to that point.

Liability. Any cap on your liability, often limited to the fees paid, and exclusions for indirect losses. Read client-drafted versions closely.

Indemnity. If included, limit it to losses you actually cause through breach or negligence.

Disputes and governing law. Which state's law applies and how disputes are handled, such as negotiation first.

Signatures and date.

Clauses to watch in client contracts

When a client sends their own contract, read especially:

• broad indemnities requiring you to cover any loss connected to the work
• unlimited liability
• ownership clauses claiming everything you create, including your existing tools and unrelated work
• non-compete clauses that restrict working for others in your field
• long payment terms, such as payment many weeks after invoice
• termination for convenience without payment for work done

It is normal to ask for changes. Explain briefly and propose specific alternative wording.

Tax paperwork

Clients commonly ask contractors to complete Form W-9, which the IRS describes as a way to request the correct name and taxpayer identification number of the payee. Clients may then need to file Form 1099-NEC for payments that meet the reporting threshold. The guide on Form 1099-NEC explains the current rules.

Keep it readable

Plain language helps both sides. A two- or three-page agreement that a client actually reads and understands is better than a long one nobody reads. Number the clauses, use headings, and define terms once.

Signing and storage

Electronic signatures are widely used. Keep the signed agreement, every scope document and any agreed changes by email in one folder per client. When questions arise months later, that folder answers them.

Make the relationship genuinely independent, put the essentials in a short master agreement, attach a scope per project, and read client contracts as carefully as you write your own.