Independent Contractor Agreement: What to Include
An independent contractor agreement is the contract between a business and a self-employed worker it hires for a project. It defines the work, the pay, who owns what is created, and — crucially — makes clear the person is a contractor, not an employee.
This guide covers the terms every contractor agreement should include, why the employee-vs-contractor distinction matters, and how intellectual-property and confidentiality clauses protect the business.
The essential terms
A solid contractor agreement states the deal so both sides know where they stand:
- Scope of work — what will be delivered, and by when.
- Fees and payment schedule — fixed price, hourly or milestones.
- Contractor status — that the worker is independent, not an employee.
- Intellectual property — who owns the work product (usually assigned to the client).
- Confidentiality — protection of the business's private information.
- Term and termination — how either side can end the agreement.
Why the employee vs contractor line matters
Misclassifying an employee as a contractor can create tax and legal liability. The agreement should reflect a genuine contractor relationship: the contractor controls how the work is done, supplies their own tools, and can work for others.
Because a contractor is not on payroll, the business collects a W-9 from them and issues a 1099 at year end rather than withholding taxes.
IP and confidentiality
For most client work, the agreement assigns ownership of the deliverables to the client once payment is made — otherwise the contractor could retain rights to what they built. Spell this out explicitly.
A confidentiality clause (or a separate NDA) keeps the contractor from sharing the business's private information. Together these two clauses protect the value the business is paying for.
Frequently asked questions
What should an independent contractor agreement include?
Scope of work, fees and payment terms, contractor (non-employee) status, IP ownership, confidentiality, and term/termination. Many also reference a W-9 and 1099 reporting.
What is the difference between an employee and an independent contractor?
A contractor controls how the work is done, supplies their own tools and can serve multiple clients; an employee works under the business's direction and is on payroll. Misclassification carries tax and legal risk.
Does a contractor need to sign a W-9?
A US business typically collects a W-9 from a contractor so it can issue a 1099 reporting payments of $600 or more. The contractor agreement and W-9 go hand in hand.
Can I write my own contractor agreement?
Yes. PaperKit's independent contractor agreement covers scope, fees, IP assignment and confidentiality, hosted online with contractor e-sign and a clean PDF.