Independent contractor basics
A practical overview of engaging contractors compliantly—what to collect, how to pay, and which records to keep.
1) Pre‑engagement checklist
- Written agreement with scope, deliverables, and IP/ownership terms.
- Vendor profile (legal name, address) and signed W‑9.
- Proofs of independence as applicable: business license, EIN, COI, website, multi‑client work.
- Define invoice cadence and acceptable evidence (invoices, timesheets, milestones).
2) Paying correctly
Pay against invoices or agreed milestones. Do not run through payroll if the worker is an independent contractor. Track totals by vendor and calendar year for 1099‑NEC.
3) Records to retain
- Contract + amendments
- W‑9 and optional W‑8 for foreign vendors
- Invoices and proof of payment
- Independence proofs (license/LLC docs, COI, website screenshots)
Tip
Ask for the W‑9 before the first payment. It prevents year‑end chasing and reduces B‑notice risk.