Hiring independent contractors is popular because it reduces employee headcount, thus lowering overall costs. Here's what your independent contractor application should contain.
updated November 21, 2023 · 3min read
Many companies use independent contractors instead of full-time employees to lower expenses. Independent contractors aren't employees but often refer to themselves as freelancers, entrepreneurs, consultants, or self-employed workers.
Companies use independent contractors to outsource their work, so instead of having a full-time IT department, a company may hire an independent contractor to do work of limited scope and for a limited duration. Hiring is then done through an independent contractor application, which is different from an employee application.
When hiring an independent contractor, clients and employers consider their company's needs and costs.
A company can hire freelancers or entrepreneurial companies to do all sorts of work, such as legal representation, accounting, decorating services, cafeteria services, writing, graphic design, or creating intellectual property such as inventions.
An independent contractor works either as an individual or, for liability reasons, as a member of a limited liability company (LLC) or a corporation.
As the client, you need to make sure the independent contractor meets the definition under the law, including the Fair Labor Standards Act.
Independent contractors are treated differently by the Internal Revenue Service, compared to employees. For example, an employer or client doesn't take income taxes, Social Security, or Medicare taxes out of an independent contractor's pay, as employers do with employees.
Instead, independent contractors fill out a Request for Taxpayer Identification Number and Certification (Form W-9) and present it to their employer so they can receive a Miscellaneous Income (Form 1099-MISC) from their client at the end of the tax year.
You may not need an application for an independent contractor, depending on what information you're able to obtain without it.
You certainly want the freelancer's resume and references, but you may also want to research the freelancer, including if they have a company listed with the Better Business Bureau.
Other information you may request include diplomas, transcripts, and certifications, if applicable.
You can also include background and drug tests as part of the application process, although it is best practice to provide notice to the applicant ahead of time.
You must also make sure that background checks are not performed randomly—every applicant should undergo the process—to prevent discrimination claims later on.
Once you've hired an independent contractor, you should also get a written contract. Many independent contractor agreements include noncompete clauses, which state that the client's work is confidential, and clauses that state that the client owns the intellectual property created by the independent contractor while working for you. You can create an independent contractor agreement using an online template too.
A basic independent contractor application should contain all of the general information found in an employee application, but you may also request additional information, such as:
While using independent contractors or freelancers can help save your business money, you need to know who you're hiring. An independent contractor application, along with background checks, resumes, and drug and alcohol testing can ensure that you hire the right person for the job.
by Ronna L. DeLoe, Esq.
Ronna L. DeLoe is a freelance writer and a published author who has written hundreds of legal articles. She does...
'Inc.' in a company name means the business is incorporated, but what does that entail, exactly? Here's everything you need to know about incorporating your business.
November 21, 2023 · 10min read
By knowing what other trademarks are out there, you will understand if there is room for the mark that you want to protect. It is better to find out early, so you can find a mark that will be easier to protect.
November 21, 2023 · 4min read
It's easy to create a new LLC by filing paperwork with the state. But to set yourself up for success, you'll also need to think about your business name, finances, an operating agreement, and licenses and permits. Here's a step-by-step guide.
November 21, 2023 · 21min read