If you're wanting to work with someone as an independent contractor rather than as an employee, you're in the right spot.
Sometimes it doesn’t make sense to hire a person as an employee just yet, but you still want to work with them. Maybe you’re not ready to hire employees yet or you might want them to keep the risk of what they do in their own business rather than taking that on yourself. Whatever the reason, you still want to work with them. Great – you can work with them as an Independent Contractor. We’ll walk you through what you need to put into your contract for their work.
Your Independent Contractor Agreement sets up your relationship with your contractor.
Like an employee, there’s the person’s compensation to think about. You can pay them a bi-weekly or bi-monthly (or some other schedule) fee, much like a salary. You could also pay them an hourly rate. You can even include bonuses and equity compensation (stock options, for example). But, usually independent contractors don’t have vacation or health benefits, and they are responsible for their own taxes and how they run their business. For example, you may want them to have their own insurance. You’ll also want to describe the work they’re supposed to do so everyone is clear from day one.
Put in some non-competition protection if you need to.
You may want to limit your contractor’s ability to compete with you while they work with you and after they move on. This is commonly called a “non-competition” clause. You may also want to limit your contractor’s ability to call up your customers, clients, or even your other contractors to ask them to do business. This is called a “non-solicitation” clause. In Canadian law, these are sensitive topics so we’ll guide you through what is more likely to be held up by the courts.
Manage risks and stress.
When a person works as an Independent Contractor, they’re generally responsible for their own work and business. So, the Independent Contractor is assuming the risk of their work. Whether you’re the client or the contractor, you’ll want to be nice and clear about business risk so you’re on the same page. Both parties generally want to limit their responsibility to things that are within their control. We’ll guide you through liability when working with – or as – an independent contractor.
When working with an independent contractor, some separation is a good thing.
An independent contractor relationship gives both parties some flexibility. You can work with others, run your own businesses as you see fit, and have more independence over how you work. But, your contract needs to be set up right for it or the law, and even the tax authorities, will look at you as employer and employee. We’ll take care of that in your contract.
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