Independent Contractor Agreement Template (Free Download)
Use this when you hire a contractor, or when a client hires you. Its main job is to document that the relationship is contractor status, not employment, and to settle scope, payment, ownership of the work, and what happens if the engagement ends early. Change the five clauses below before you send it.
5 clauses to change before you send it
1. Contractor status (the control test)
Whether someone is a contractor is decided by facts, not by the label in the contract. Courts look at control over schedule, tools, supervision and whether the person can work for others. Write what is actually true: the contractor sets their own hours, uses their own equipment, can take other clients, and invoices for results rather than hours. Calling an employee a contractor does not make it so.
2. Payment, invoicing and taxes
State the rate, whether it is per project or per hour, invoice timing, and payment terms (Net-15 or Net-30 are standard) plus a late fee. Add that the contractor is responsible for their own taxes and that no withholding is made. In the US, the client files a 1099-NEC for payments of $600 or more and will normally ask for a W-9 first.
3. Who owns the work
IP does not transfer by itself. Say whether the deliverables are a work made for hire, or assigned to the client on full payment. Name any pre-existing tools, libraries or templates that stay with the contractor and are merely licensed. Keep a portfolio right unless the client objects in writing.
4. Term, termination and unfinished work
Allow termination with written notice and spell out what is owed at that point: completed milestones plus hours worked, and expenses already committed. If the client cancels late, a kill fee is reasonable. Without this clause the end of an engagement becomes a negotiation under pressure.
5. Liability, indemnity and insurance
Cap total liability at fees paid (or a multiple) and exclude indirect losses. Refuse unlimited indemnity — it is the clause that turns a small project into a large loss. If the work carries real risk, require the contractor to carry their own insurance rather than promising to cover everything yourself.
Local differences
US: several states apply the ABC test, which is stricter than the federal test — check your state before relying on contractor status. EU/UK: the UK has off-payroll working rules (IR35) and the EU has a presumption of employment in some countries. For cross-border work, add which law governs and how disputes are handled.
What this independent contractor agreement covers
Contractor status, scope of work, fees and payment, invoicing and taxes, intellectual property, confidentiality, term and termination, liability and governing law.
It works for a single project and for ongoing work. For ongoing work, attach a statement of work and attach a rate card so the scope stays defined.
How to use it
Download the DOCX, fill in the parties and the scope, delete clauses that do not apply, and send a PDF for signature. Keep the signed copy with any statement of work attached to it.
If you are the contractor, read clauses 1, 3 and 5 first — status, ownership and liability are where the real risk sits.
Contractor status in practice
Three facts decide most of these cases: who controls when and how the work is done, who provides the tools, and whether the person can work for other clients. Write those facts down as they actually are, not as you wish them to be.
Avoid employee vocabulary in the document — "hours", "salary", "probation", "vacation". Use "fees", "invoice", "term" and "deliverables". Language is not decisive, but it is evidence.
Working with contractors abroad
Cross-border engagements add withholding, currency and enforcement questions. State the currency, who bears transfer fees, and which law governs.
Some countries presume employment unless proven otherwise, and withholding obligations can fall on the payer. Check the local rule before the first invoice rather than after the first tax filing.
Frequently asked
What makes someone an independent contractor instead of an employee?
In practice: control over how and when the work is done, who supplies the tools, whether the person can work for other clients, and whether they invoice for results. No single factor decides it; the overall picture does.
Does a contractor need a W-9 or a 1099?
In the US, the client usually collects a W-9 before paying and files a 1099-NEC if the contractor was paid $600 or more in the year. Contractors pay their own self-employment tax; nothing is withheld.
Who owns the work if the contract says nothing?
It depends on jurisdiction, which is exactly why you should not leave it blank. State either work made for hire or an assignment on payment, and keep a portfolio licence.
Can I use this template for contractors in another country?
The structure works, but contractor status, tax and withholding rules differ by country. Add a governing-law clause and check the local rules before signing.
Does a contractor need their own insurance?
Often yes, especially for work on client premises or with professional liability exposure. Requiring it in the agreement is cheaper than discovering the gap after an incident.
Can a contractor work for competitors?
By default yes — that independence is part of what makes them a contractor. If the client needs exclusivity, it should be a narrow, paid, time-limited clause rather than a blanket restriction.
TidyContracts provides general information and starting documents, not legal advice. We are not a law firm and do not create a lawyer-client relationship. Contract law differs by jurisdiction — have a qualified lawyer review anything important.