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Consultant Agreement Frequently Asked QuestionsClick Here For Employment Agreement Frequently Asked QuestionsAny time you hire a consultant, rather than an employee, it is very different because a consultant will receive IRS Form 1099 rather than a W-2 form with deductions withheld. This means that the consultant will be responsible for providing all necessary insurances as well as for paying all of his or her taxes, including income, social security, and any state or local taxes that may be applicable. Although there is no precise definition that explains exactly what a "consultant" is, a consultant is generally someone with particular skills, knowledge, or experience who will come in from the outside and use their abilities to help the client who has hired him or her. When we say "coming in from the outside" we mean that they are not an employee who works for your company, but rather someone, perhaps a specialist, that you contract for a specified period of time to help with some aspect of your business. Certain characteristics that set a consultant apart from an employee are that a consultant will frequently operate from their own offices, working their own hours, and they will use their own money for business supplies and necessities. One advantage for consultants is that they generally do not fall under many state and federal employment laws, thus allowing both the client and the consultant more flexibility in work and payment schedules. They may be contracted only to help on one particular project and be paid by the hour, or for a longer period of time and be paid by the month. Q: Is there any difference between a consulting agreement and an independent consultant agreement? A: The only difference between the two is the words being used to refer to them. An agreement is basically a mutual understanding about something between at least two people. A consulting agreement is simply the document used to form the contract between a consultant and his or her client, and an independent consultant agreement is the same thing. So while you may hear and see both names being used, they are nevertheless talking about the same type of document-- a written agreement that is binding between a client and a consultant that lays out the core terms of their consulting arrangement. Q: When should a consulting agreement be used? A: A consulting agreement is a significant and necessary document to use anytime you are engaging the services of a consultant. Without a written consulting agreement, too many important issues are left unclear, and there is no written record that shows the terms upon which the consultant was engaged. If there is ever a question about some element of the agreement in the future, you will not only be able to answer the question, but also be able to prove its existence because everything will be written down in a signed consulting agreement. Furthermore, should there ever be a legal question about whether the consultant is an employee rather than a consultant, the consulting agreement will be instrumental in proving that there is no employer/employee relationship. Because a consulting agreement is so vital when it comes to demonstrating the association between you and your consultant, you should always put it in writing. Click here to start building your consulting agreement now! |
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