By definition, a freelancer is an individual who is self-employed rather than committed to performing paid labor for a single employer over an open-ended period. Freelance workers decide which clients they work for, what tasks they accept, and how many projects they take on at once.
Is a freelancer the same thing as an independent contractor? In most ways, yes. The IRS considers both types of workers to be self-employed, receiving a 1099 instead of a W2. The main difference is that freelancers often juggle multiple gigs concurrently, while independent contractors focus all their time on completing a single, highly involved project.
In both cases, the client only dictates the work that needs to be performed by the freelancer. They do not have control over the worker’s schedule, where they work, or the methods used to create the deliverables — nor are they likely to provide benefits that typically come with full-time employment.
That’s what’s great about being a freelancer in today’s marketplace. You can choose the jobs you do, where you work, when you work, how much work you take, and when you want to end the working relationship.
Freelancing can be risky if you and your client aren’t bound by a joint agreement. That’s why you need a freelance contract.
Why do freelancers need contracts?
Do I need a contract as a freelancer? Absolutely yes. Using a written freelance contract has many benefits, such as legal protection and assurance that you’ll be paid for the work you complete. This legal document outlines and binds both parties to agreed-upon terms of the working relationship. You risk getting burned if you don’t have one in place.
Don’t settle for an oral agreement even if you know and trust the client. You should still have a binding agreement that stipulates both parties’ expectations in writing. Otherwise, you could face trouble like non-payment, scope creep, and even lawsuits.
Are freelance contracts legally binding? Yes, a freelance agreement is more than an informal arrangement; it’s a binding contract that stipulates all terms of the working affiliation between the independent contractor and the client.
When both parties sign the document, it becomes legally binding. Either side can use the contract in court as evidence when proving a breach of terms. This incentivizes both parties to fulfill their end of the deal and ensures that you follow labor laws.
Avoid misunderstandings by clearly defining the terms and scope of work in a legal contract. A written agreement should detail everything the company is asking you to do, the deadlines, and what will be given in return (e.g., the pay rate). These written terms will come in handy later, should questions arise about the initial agreement.
All upfront expectations should be put in writing for everyone to see and agree upon, so don’t sign a contract until you’ve cleared up any ambiguity.
You don’t have to be a full-time freelancer to take freelancing seriously. Using an official contract for your self-employed side hustle is a great way to show potential clients that you take your freelance work seriously and can be trusted. If you don’t take your contract seriously, chances are you don’t take your job seriously, either. A formal pact establishes a serious working relationship on good terms.
Client Red Flags
An unambiguous contract allows you to confirm if a potential patron is reasonable and reliable. You’ll have a higher chance of spotting any concerning stipulations or unreasonable demands if you and the client pen a written agreement. Does the buyer ask for any suspicious clauses that could indicate their intent to take advantage of you?
Beware of any client who avoids signing a reasonable contract.
Refusal to sign could reveal their intent to take advantage of freelancers. This could mean anything from micromanagement to refusing payment.
How do I know if a freelance contract is fair? Consult a lawyer specializing in freelance contracts to assess your contract. They can sort through the legalese and give legal advice to help make your documents equitable.
What to Include in a Freelance Contract
Here’s our guide to the most common elements in a freelance contract. Note that not every contract will look the same. You may need to adjust yours to include different elements based on the work you’ll be doing and the client’s needs.
Names of Both Parties
A written contract should always include the names of the client and freelancer as well as their contact information like phone numbers and business addresses. If either party represents a company or organization that is entering into the agreement, make sure the company’s legal and operating names are also stated.
Include official job titles of both signees to affirm their position within and relationship to the party they represent. Your EIN is also a worthwhile item to include.
Clarification of Legal Relationship
Provide insight into why this arrangement is occurring between you as the freelancer and this company. How are you being contracted and for what purpose?
Services to Be Provided
Clearly state the work you are agreeing to do for the client. Give a detailed description of the services or deliverables you’ll provide, how communication will occur during the project, and who the points of contact will be. Mention how the work will be assigned and delivered.
Be as detailed as possible to prevent misunderstandings and mitigate the possibility of scope creep. If you do not, the client may enact unapproved changes to the scope of the project and add extra work without technically breaking the contract.
Project Time Frame
Most freelance projects’ timelines can’t be predicted entirely, but you should still include some idea of how long the contract will last and the expected turnaround time for work completed during that period of time.
That doesn’t necessarily mean the freelance contract should include specific due dates for every individual piece or task you complete. Instead, outline the overall timelines for overarching projects and certain major milestones along the way. Also clarify if the deadlines are flexible and what the repercussions are for missing them.
This is the part freelancers love most; you don’t want to overlook it! Identify the invoicing method, payment schedule, and preferred payment methods, like credit card, direct deposit, or PayPal. Specify if the compensation system is an hourly rate, per-item/per-word rate, a fixed cost for the entire project, or a retainer. Declare payment currency if the parties are located in different countries.
Changes & Revisions
Sometimes, your first pass at a project isn’t perfect, and revisions may be needed. Include a section that outlines how revision requests will be treated, their time frame for completion, and the limit on how many versions you’ll provide. This section should also mention if the client can make changes to your work.
Copyright & Intellectual Property Rights
When you create deliverables for a company, who owns the rights to them? And does the buyer have the right to share and transform the products as they please?
Specify which parties have rights to make copies of your work and distribute it. Make it clear if any exclusive copyright protections are in place and who retains ownership rights of the work.
Designating copyright and intellectual property rights are especially important if you’re a freelance writer and don’t want your compositions being altered or owned by someone else.
Both parties intend to fulfill the contract for its entire duration, but something may occur that prohibits completion. In that case, you need the ability to terminate the freelance contract and still receive compensation for what work you did complete. Your client also needs to know terms for early cancellation. This protects both parties in case something comes up.
The written contract is not legally binding until both parties sign it, even if the names are printed within the text. Handwritten or digital signatures must be present, as an oral affirmation of a contract may not suffice in a lawsuit.
The freelancer doesn’t set all of the terms in the contract; the buyer should have the opportunity to stipulate their mandatory terms, too. If you’re offering a similar contract template to all of your clients, be prepared to add sections in which the client’s obligatory policies are defined.
A non-disclosure agreement is necessary if the company and freelancer are sharing confidential information that shouldn’t be shared with patrons, competitors, or the public. NDAs ensure sensitive or private information won’t be disclosed to third parties and result in problems for your freelance business or the organization.
Your client may not want you working for their competitors while you’re in a relationship with them. This may be to mitigate the chance of inside data being shared or simply because they want exclusive ownership of your skills and efforts so they aren’t concurrently benefiting their rivals.
The non-compete period typically lasts for the duration of the contract but may extend past the contract’s termination for extra precaution. Pay close attention to this part, as it will affect your future income.
Which party will be responsible if problems occur during the contract or regarding your work? This section identifies who will be held liable for such circumstances and if compensation will be paid for any damages or losses.
Indemnity clauses can be tricky to navigate because they could hold you as the freelancer responsible for changes or actions taken by your client with your work. So, make sure any indemnity conditions you set are amicable for both parties.
What should be in a freelance contract? A freelance contract must specify the parties involved, the work being commissioned, the terms of fulfillment and compensation, and signatures to be binding. You can include more stipulations as desired, such as legal liability protections and confidentiality terms.
How do I create a freelance contract? Start with a basic outline of the terms you’ll agree to when working with new clients. It helps if you begin with a basic template. You can find freelance contract templates by searching for reputable ones online or contacting a lawyer. You can also ask if the client has a standard contractor agreement that they use for all freelancers and negotiate from that.
Once the Ink Is Dry: What to Do with Your Contract
Now that you’ve finalized and executed the freelancer contract, make sure you follow up with these steps:
Distribute: Ensure both parties possess a complete copy of the freelance contract that contains all necessary signatures.
Archive: Store your contract somewhere secure. Keep a copy of it somewhere more accessible that you can look at on a regular basis (printed or digital).
Submit a W-9: Sending a W-9 form to the company is often necessary in freelancing arrangements for the IRS to monitor payments.
Familiarize: Spend time rereading the contract as you navigate through the project. Note all crucial guidelines or stipulations that you may need to recall and adhere to.
Verify payment: Ensure that the company is paying you at the rate, method, and frequency that they agreed to.
Uphold terms: Ensure you don’t violate any terms in the contract, and assert your rights if the company tries to infringe on them. Be prepared to find legal counsel if necessary.
Communicate personal changes: Let the client know if your contact information, address, or legal name changes from what the contract shows.
Plan for taxes: Make sure you receive a 1099 form in time to file with your income tax returns.
Have an addendum template: This is handy to have in case you need to change something in the signed contract and don’t want to re-execute an entirely new contract.
Renegotiate: Be prepared to revisit the contract as the project or term nears its end. Consider if you’ll want to renew the contract at the same terms or will renegotiate any provisos.
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