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Using an Independent Contractor? You Need a Rock-Solid Contract. Using proper legal agreements can minimize risk and improve productivity.

By Jonathon Ende Edited by Frances Dodds

Opinions expressed by Entrepreneur contributors are their own.


Business owners know that owning too many responsibilities can be not only exhausting -- but at times paralyzing. We all need to play to our core competencies to ensure success, and at times that means outsourcing work to independent contractors.

Issuing work to an independent contractor can, however, be difficult and at times risky for your business. That contractor isn't a member of your company and not familiar with your policies, work culture or conduct. For these reasons, it's important to generate ironclad independent contractor agreements each time you outsource a project.

Related: 3 Basics to Hire and Train a Virtual Assistant

Here are just four ways that these agreements can ensure that your project or job gets done without taking any unnecessary risks.

1. Set clear expectations.

Maintaining clear and consistent expectations for independent contractors is no easy feat. Your initial contract is the only enforceable measure you have to ensure that a contractor meets your expectations. Do you want your product positioned or sold in a certain way? Place that expectation explicitly in the agreement. Do you want your project completed within a certain timeline? Again, place that deadline in your agreement. This is your best and only chance at quality assurance -- so make sure your expectations are as detailed and comprehensive as possible.

2. Define compensation and incentives.

Motivating employees who don't work for you is equally as hard as managing them. Place detailed compensation and incentive plans into the initial agreement to get the best work from your contractors. Explicitly state incentives to influence the outcome of your project, such as bonuses for finishing quickly, under budget or exceeding quotas. If a contractor tries to renegotiate compensation or payment terms, you can always use this agreement as collateral to ensure that your initial terms are met.

Related: Are Sharing-Economy Workers Contractors or Employees?

3. Regulate activities that reflect upon your company.

Whether you like it or not, this independent contractor will represent your company to the public eye.To avoid aggravation down the road, it is essential to regulate certain activities that can affect your relationships with other companies or the general public. Codes of conduct for contractors and their employees, likes sales tactics or product procurement guidelines, will deter behavior that might have ramifications down the road.

4. Protect your company legally.

Regulating activities might prevent a public relations nightmare or a failed business relationship, but taking the right legal steps within an independent contractor agreement can save your business altogether. Hiring a contractor without the right clauses in your agreement has the potential to do serious harm to your business, resulting in stolen intellectual property or lawsuits. Make sure that any contractor agreement you enter into comes equipped with the right clauses -- ones that indemnify your company, release you from the liability of the contractor's actions and protect your trade secrets.

Related: 5 Employment Law Tips for Startups

Jonathon Ende

CEO, SeamlessDocs.com

Jonathon Ende is a serial entrepreneur that has been starting companies since college. He is currently CEO of SeamlessDocs and is an expert in all things form related. He enjoys working with small businesses and governments to help them digitize and automate form processes.

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