Things to take into account before starting work with a contractor
Are you about to tackle a professional or personal project and need an expert’s help? It may be a good idea to hire a contractor for the job.
However, before you start work with one, there are a few things you need to take into account to make sure that the partnership goes as smoothly as possible.
Besides having to create a contractor agreement, you need to negotiate terms and payment, procure IRS Form W-9, and so on.
Here is a checklist to help you hire a contractor and ensure your project is a success:
1. Choose a contractor
First, you need to find a contractor that will meet all your project needs. Get recommendations from friends, colleagues, and relatives, interview potential contractors, and get bids. This will help you zero in on the right person for the job.
2. Check permits and licenses
Licenses, permits, and registrations for contractors differ from state to state. Read up on your state laws and see if your contractor has the legally required licenses and permits.
Discuss the terms of the agreement with the contractor and decide on the key points of the contract, including its duration, payment terms and schedule, deliverables, deadlines, and so on.
4. Set a payment schedule
Set a payment schedule in place ahead of time. Around a 10% down payment is a good amount to settle when both parties sign the agreement.
Certain states have limits on the amount of money that an independent contractor can ask for as a down payment. Learn about local regulations and pay the amount accordingly.
In terms of pending payments, you can set your terms. For example, three payments of 25% can be paid in installments over the project’s duration. Pay off the remaining 15% once the project is completed and you’ve evaluated the quality of their work.
It’s best to pay by check or credit card if it is a small project. Arrange financing in advance if you are tackling a big project.
5. Procure IRS form W-9 from the contractor
When you hire a contractor, you need to get the IRS Form W-9 from them. This form details the contractor’s Social Security Number (SSN) and Employer Identification Number (EIN). The contractor must fill in these details in the form and submit it to you for your record.
6. Create a contractor agreement
Now that you’ve discussed the contract terms and received IRS Form W-9, you need to create an Independent Contractor Agreement. It is the most important document you will need when hiring an independent contractor or freelancer.
This Contractor Agreement states all the terms of your deal, making them legally binding for both parties.
7. Sign the agreement
Once you’ve created an Independent Contractor Agreement, you and the contractor must sign it to officially put it into effect.
It is not legally mandatory to have witnesses for your signing. However, some financial institutions mandate this step for additional security.
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