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Kdragonfly's Compliant Gig Toolkit

The Compliant Gig Toolkit 
Demystifying Independent Contractor 
Disclaimer: The content in this Toolkit is de...
Kathy Dotson is a talent 
acquisition professional with 
over 20 years of recruiting 
and contingent workfor...
Chapter 1: Why Hire a Guru? 
Chapter 2: Compliance – Demystified 
Chapter 3: Finding and Vetting Indep...

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Kdragonfly's Compliant Gig Toolkit

  1. 1. The Compliant Gig Toolkit Demystifying Independent Contractor Engage/ment Disclaimer: The content in this Toolkit is designed to provide educational information and should not be considered legal advice www.kdragonfly.com
  2. 2. AUTHOR PAGE: Kathy Dotson is a talent acquisition professional with over 20 years of recruiting and contingent workforce management with expertise in a variety of settings. She holds a Bachelor’s Degree in Business from the University of Iowa. Kim Homolka is a technology services, human capital, talent management and contracting veteran with over 20 years experience in the Commercial and Federal Government Sectors. She holds a degree in Social Science from Colorado State University. www.kdragonfly.com
  3. 3. TABLE OF CONTENTS: Chapter 1: Why Hire a Guru? Chapter 2: Compliance – Demystified Chapter 3: Finding and Vetting Independent Contractors Chapter 4: On boarding Chapter 5: Successful Oversight Chapter 6: Paperwork and Taxes Appendix: Forms and Resources Disclaimer: The content in this Toolkit is designed to provide educational information and should not be considered legal advice www.kdragonfly.com
  4. 4. CHAPTER 1: Why hire a Guru? The way we work is changing. Fluctuations in business activity are increasing businesses’ demand for project-based work and at the same time, professionals are seeking more control of when, where and how they work. Independent Workers (otherwise known as Gurus, Independent Contractors, freelancers, consultants, etc.) provide the perfect on-demand talent solution and are considered a variable asset to your organization helping to control costs. It’s The New Way to Work! This toolkit is a guide to not only engage Independents but also to assist your organization in compliance with state and federal regulations.
  5. 5. The Compliance Toolkit “What matters is that the employer has the legal right to control the details of how the services are performed.” Source: www.irs.com Let’s start at the beginning and look at the definitions of an Employee vs. Independent Contractor: Employee (Common-Law Employee) Under common-law rules, anyone who performs services for you is your employee if you can control what will be done and how it will be done. This holds true even when you give the employee freedom of action. What matters is that you have the right to control the details of how the services are performed. Independent Contractor The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done. If the services performed can be controlled by an employer (what will be done and how it will be done), the individual is more than likely an employee. This applies even if the individual is given freedom of action. What matters is that the employer has the legal right to control the details of how the services are performed. In addition to the definitions above, Independent Contractors are typically engaged in project-based work that usually has a project start and end date. You may also wish to engage a Contractor to fill a specialized skill gap not currently found within your organization. For more information on Employee vs. Independent Contractor - visit the IRS website here. www.kdragonfly.com
  6. 6. The Compliance Toolkit The 2014 Fiscal Budget includes approximately $14 million to combat misclassification. Deciding whether to hire an Employee or engage the services of an Independent can be confusing and the IRS rules not make it any easier. The decision should be made carefully as misclassification is costly. Costs incurred as a result of misclassification can include:  Legal fees  Unpaid wages, including overtime  Unemployment taxes  Workers Compensation premiums  Payroll taxes  Employee benefits Let’s look at the advantages and disadvantages to help in your decision to hire an Independent: Am I compliant?! www.kdragonfly.com
  7. 7. The Compliance Toolkit It typically costs 20%-30% more to hire an employee. ADVANTAGES of engaging an Independent Contractor Reduced Costs– Working with Independents saves you the expenses of hiring. These expenses include: –Employer-provided benefits, space and equipment –The employer’s share of Social Security and Medicare –State Unemployment Insurance –Worker’s Compensation insurance In addition, employer training costs are reduced as Independents are able to hit the ground running. It typically costs quite a bit more to hire an employee – 20%- 30% more! Freedom and Flexibility – You have greater freedom to hire based upon tasks or projects and avoid the expense and legal trouble that can accompany layoffs. Reduced Exposure to Liability – Independents are just that, Independent business people who are not protected under the same state and federal laws as employees. Employees have rights such as:  The right to at least minimum wage and if qualified, overtime compensation  Protection from employment discrimination  The right to form a union  The right to take time off to care for a sick family member or newborn Your risk or exposure to certain lawsuits is reduced such as wrongful termination and job discrimination. www.kdragonfly.com
  8. 8. The Compliance Toolkit DISADVANTAGES of engaging an Independent Contractor Less Control – Independents control how to perform the task or project. That’s why you are engaging with them. Interfering or supervising increases your exposure to risk. Later on, we’ll talk about ways to reduce this risk. Injury Liability - Independents are not covered by workers’ compensation, which means that they can sue you for damages if they are injured on the job because of your carelessness. Copyright Ownership - If you hire an Independent to create a product that can be copyrighted–such as an article, book, or photograph–you might not be considered the owner of the work unless you use a written agreement transferring copyright ownership from the Independent to you. Government Audits - You face a risk of government audits. State and federal agencies–particularly the IRS–want to see as many workers as possible classified as employees, not Independents. The federal government allocates time and money to ensure compliance. The more workers classified as employees, the more tax and insurance money flows into government and the harder it is for workers to underreport or hide their income. Working with Independents can be done successfully. Knowing how to ensure compliance should be considered before you engage with a Contractor. In the next chapter, we demystify compliance. www.kdragonfly.com
  9. 9. CHAPTER 2: Compliance - Demystified Compliance is confusing. There are many factors that determine if the relationship is Independent. A critical variable or factor is the degree of control and evidence of independence. The IRS looks at control in three ways: 1. Behavioral 2. Financial 3. Type of Relationship Let’s take an in-depth look at these three degrees of control: www.kdragonfly.com
  10. 10. The Compliance Toolkit 1. Behavioral Control Behavioral control refers to facts that show whether there is a right to direct or control how the worker does the work. A worker is an employee when the business has the right to direct and control the worker. The business does not have to actually direct or control the way the work is done – as long as the employer has the right to direct and control the work. The behavioral control factors fall into the categories of: – Type of instructions given – Degree of instruction – Evaluation systems – Training 2. Financial Control Financial control refers to facts that show whether or not the business has the right to control the economic aspects of the worker’s job. The financial control factors fall into the categories of: – Significant investment – Unreimbursed expenses – Opportunity for profit or loss – Services available to the market – Method of payment 3. Type of Relationship Type of relationship refers to facts that show how the worker and business perceive their relationship to each other. The factors, for the type of relationship between two parties, generally fall into the categories of: – Written contracts – Employee benefits – Permanency of the relationship – Services provided as key activity of the business For more information visit www.irs.gov www.kdragonfly.com
  11. 11. The Compliance Toolkit To make the picture even clearer, follow these 10 steps each time you engage the services of an Independent: I get it! Disclaimer: The content in this Toolkit is designed to provide educational information and should not be considered legal advice www.kdragonfly.com
  12. 12. The Compliance Toolkit 10 Steps to Independent Contractor Compliance: 1. Give up control. The Independent controls when, where and how the work is done. 2. Determine if the Independent has a business structure and if they are marketing their business openly through a website or other advertising methods. This is one key area that will be reviewed in an audit. 3. As part of your on-boarding process, it is recommended that you do not provide the Independent with training, employee handbooks, policies, employment application, equipment or materials - this indicates an employee relationship. 4. Sign an Independent Contractor Agreement and Statement of work prior to engaging the Contractor. Follow the terms of the agreement, including its termination provisions. If you engage the Independent after the original project is completed, sign a new Independent Contractor agreement. 5. The Independent should have their own business cards and marketing material with their business name on them. You should not provide business cards for them. 6. The Independent should pay their own travel or other business expenses. 7. It is normal to check in or meet with the Independent periodically to ensure the project is progressing and major milestones are met. Don't require an Independent to provide you formal written reports. Along with this, avoid inviting or requiring an Independent to attend regular employee meetings or outside functions. 8. The Independent ultimately determines when and how the work is performed. The Independent chooses how the work is completed, including sub contracting project tasks to other Independents whom they supervise. 9. Pay the Independent by milestone outlined in your SOW. Avoid paying an hourly rate and pay the invoices as you would pay other vendors. 10. The Independent typically works on several projects at one time. Avoid giving Independents so much work or such short deadlines that they have to work full time for you. www.kdragonfly.com
  13. 13. The Compliance Toolkit Don’t lose sleep. If you are worried your organization may be out of compliance or need additional assistance with compliance, seek professional guidance from a Kdragonfly Gig Manager or seek professional advice from your accountant or attorney. A compliance check will help you sleep better at night. www.kdragonfly.com
  14. 14. CHAPTER 3: Sourcing and Vetting So, you’ve made the decision to engage an Independent Contractor but where do you find the right talent and how do you control the vetting process to ensure you remain compliant? Next, we’ll discuss finding, screening and vetting Independent Contractors. www.kdragonfly.com
  15. 15. The Compliance Toolkit Finding the right talent Searching for Talent– Utilizing a variety of sources to find talent is the best way to ensure you will find who you are looking for. Most people rely on their network, which is a great avenue, however, it may not ensure you are receiving the best talent. Taking the time to widen your search and vet Independents thoroughly could result in time and money saved in the long run. Here are a lists of resources you may want to engage: 1. Kdragonfly offers a free online marketplace to post your Gig and search for Gurus. We obviously recommend starting here. 2. Online job boards -Post to other job posting sites or online sites specializing in Contractors such as Odesk or Elance. Posting cost will vary and most Contractor sites will charge a percentage of the project cost. 3. Network – Utilize your network to find talent. Post a discussion or update on LinkedIn and Facebook. Many social media outlets offer paid job listings as well. 4. Post the project on your own website or blog. www.kdragonfly.com
  16. 16. The Compliance Toolkit Screening for talent- Ensuring the Independent has the talent needed to complete the project is important. Creating a list of interview questions that are consistently used during each candidate interview is helpful. If your project is highly technical, relying upon a technical resource or utilizing technical assessments such as ProveIT (www.proveit.com) will assist in your screening process. Above all, ask for references and recommendations from clients who have utilized the Contractor’s services in the past. Call at least two references. This is time consuming but well worth the time invested. Vetting for Compliance – Once you’ve made the final selection based upon talent, you will want to make sure you take the extra step to vet the final Contractor candidate for compliance. Here is a short checklist to ensure your Contractor is set up properly which ultimately reduces your compliance risk: √ The Independent has a business name that is filed with the Secretary of State. For example, Colorado’s website to check is: Colorado Secretary of State √ The Independent has a website and/or actively advertises their business in the open market. Ask how he or she markets their business. Keep copies of business cards and marketing materials. √ Ask for a list of other clients the Independent has serviced in the past year. √ The Independent has liability insurance and worker’s compensation insurance, if appropriate. Keep proofs of insurance on file. Now that you have the talent ready to go – let’s onboard! www.kdragonfly.com
  17. 17. CHAPTER 4: On boarding The paperwork for independent contractors is much simpler than for employees. In some cases the only form that may need to be completed is a Form W-9, which includes the contractor's taxpayer identification number, name, and address. You must have a W-9 on file for each independent contractor so that you don't have to withhold income taxes from that individual. . There may be an income tax withholding forms required by your state. Check with your state's income tax authority for more information. Your organization may also require evidence of insurance such as workers compensation or liability insurance. Most important of all is an Independent Contractor Agreement, including a Scope of Work (SOW) signed by both parties. Let’s look at the Independent Contractor Agreement’s key elements first. www.kdragonfly.com
  18. 18. Key Elements of an Independent Contractor Agreement Define the Relationship • An important element of the independent contractor agreement defines the relationship of the contractor to the business hiring him or her. The definition establishes that the parties are not entering into an employer-employee relationship. Duties, Contract Terms and Acknowledgements • Along with a description of the services the independent contractor agrees to provide for the hiring party, an essential element to address in the agreement is the time involved. The agreement might indicate incremental dates for the completion of segments of a large project. It might also include a clause to extend the agreement. If applicable, the agreement should include the location where the indicator contractor will perform the work. Another key element is the agreed upon finished product or deliverable that the contractor will provide. Payment and Reimbursement of Expenses • The agreement should include the terms for paying the independent contractor, such as an hourly or flat rate. It should indicate when the contractor will receive payment such as when the work is completed or in portions based upon milestones, deliverables or upon completion of the project. The agreement should include details about who is responsible for the cost of required materials and supplies. Protections and Enforceability • An independent contractor agreement generally includes key elements that provide legal protections and guarantees, usually for the hiring company. Provisions typically prohibit conflict of interest and assignment of rights pertaining to the contractor without the consent of the payer. The agreement generally requires the contractor to maintain confidentiality and comply with provisions for arbitration and for amending or terminating the agreement. An enforceability provision can state that if any part of the agreement is for any reason unenforceable, the remaining parts of the agreement remain in “full force and effect.” www.kdragonfly.com The Compliance Toolkit
  19. 19. The Compliance Toolkit The Scope of Work(SOW) The scope of work (SOW) is a formal document that captures and defines the tasks, activities, deliverables and timeline that an independent contractor will execute for a project. The scope determines the boundaries of the client project and can provide the foundation for measuring performance against project goals. You will find a sample scope of work in the Appendix. Your scope of work becomes part of the Independent Contractor Agreement, so it is important to clearly define the entire scope without being too restrictive. The SOW should address the following: Work that will be performed Roles and responsibilities Timeline for work Performance measurement Next, we’ll discuss what should be included in a Scope of Work. www.kdragonfly.com
  20. 20. The Compliance Toolkit Writing a Scope of Work (SOW) 1. Objective - Establish a scope statement that identifies the project objective or purpose. The statement defines objectives of the project, and a high-level overview of the solution. This ensures clarity as to why the work is being performed. 2. Tasks - List the tasks to be performed to indicate any performance requirements and all project requirements that the contractor must comply with during contract performance. Every step of the project should be defined in terms of work that has to be done. As much as possible, group similar or related tasks and organize each task in logical order. 3. Deliverables - Identify project milestones or deliverables required for the project to be successfully completed. Deliverables are the results that need to be accomplished at the end of each phase or at the end of the project. Determine how you will monitor the deliverables. Some methods used include random sampling, periodic inspections, and reporting. 4. Schedule - Defines the “when”. The schedule provides a detailed schedule of the milestones and deliverables. Minimally it should include all of the client and client’s partner touch points. The data should include the task and end date. Task start dates are optional. 5. Price - The pricing section needs to include the price including both time of staff and outside expenses. It should also discuss the pricing assumptions such as is this fixed fee or time and materials, how outside expenses are handled, payment terms including a payment schedule, and if payments are based on a milestone/deliverable or a schedule. 6. Inclusions - A project's scope has to highlight all the essential work that has to be done. Everything that is mentioned as part of the project is termed as an inclusion. It may be categorized into different categories and subcategories. Identify any resources that are necessary to complete each task that includes labor, equipment, or materials. 7. Exclusions - Anything that is not mentioned in the scope statement is outside the scope of the project and should not be done. However, there are certain clauses or conditions that may be mentioned in the project for things that should not be done. These clauses are termed as exclusions. Things that are specifically mentioned as 'not to be done' in a project are termed exclusions. www.kdragonfly.com
  21. 21. Chapter 5: Successful Oversight You are well on your way to successful engagement of an Independent . The Independent Contractor Agreement and SOW are time consuming but will provide a starting point for beginning and overseeing a successful project. Clarity and communication is key for both you and the Independent. Utilize the SOW to manage the Independent including timeline, milestones and deliverables to communicate clearly and ensure your project stays on task. Here are a few more tips: www.kdragonfly.com
  22. 22. Successful Independent Oversight  Provide predictability - Let the contractor know the expected timeline, deadlines and other information about your project so he or she can decide whether it’s a good fit or not.  Put it in writing -Even with contractors you’ve worked with before, written contracts are essential to define a project’s scope and keep things from getting out of control. Contracts protect both sides, so be sure to carefully think over all the elements that may need to go into your contract. If the contractor creates a contract, read it carefully—or you may regret it.  Communicate clearly - Unshared expectations are the downfall of many an independent contractor relationship. Clearly define your terms at the beginning of the project so you both understand what the other expects. This way, you won’t end up paying for something that falls short of what you wanted. Communicate actively and give feedback especially if the contractor's work fails to meet expectations.  Vary your method of communication - Establish ways to interact beyond email. For independent contractors who work remotely and do not regularly interact with others, it is nice to Skype or meet in person rather than always communicating via impersonal email. Be available to answer questions along the way.  Avoid micromanaging – If you have done your homework including finding a qualified Independent, then let him or her do it. Do not worry about the hours worked and do not ask for too many updates. Remember the individual is not an employee, but someone who works independently to provide a work product.  Pay - Pay invoices in a timely manner to foster a good relationship with the independent contractor.  Wrap it up - At the end of each project, it’s a good idea to go over what went well and what didn’t, so you can learn from it and fine-tune your relationship going forward. It’s easy to skip this step, but it really pays off if it enables you to streamline your independent contractor process. www.kdragonfly.com The Compliance Toolkit
  23. 23. CHAPTER 6: Paperwork and Taxes Paying an independent contractor is fairly simple, compared to paying an employee. An independent contractor receives compensation in one of several methods, depending on the agreement set up between your company and the contractor: www.kdragonfly.com
  24. 24. The Compliance Toolkit • Hourly. Some contractors get paid on an hourly basis; for example, a computer programmer might get paid for hours worked on programming tasks. • By the Job. The other payment alternative is to pay by the work done or by the job. For example, a blogger might get paid by the number of blog posts created. A cleaning service might get paid a set amount for cleaning your office. In either case, the contract should spell out the payment amount and method. • Withholding and Deductions from Contractor Pay In most cases, no federal or state income tax is withheld from the pay of an independent contractor. There are exceptions, in the case of a contractor who does not have a taxpayer identification or has provided an incorrect taxpayer ID. • Employment Taxes and Independent Contractor Pay You do not need to withhold FICA taxes (Social Security and Medicare) from the pay of an independent contractor. The contractor is independent and is responsible for his or her own self-employment tax payment. No unemployment taxes or workers compensation payments are required for independent contractor workers. www.kdragonfly.com
  25. 25. 1099 Processing 1. Prepare and send out a W-9 form (see Appendix) to each vendor at the time a contract is initiated. W-9 forms should be retained for four years. 2. Set up appropriate vendors in your accounting system. 3. Accurately post all checks to 1099 vendors. 4. At year end, determine which vendors must receive a 1099. Send 1099- MISC each year for any contractor (e.g., attorney, accountant, consultant) paid $600 or more for services provided during the year. 5. Forms are available from office supply dealers, your software provider or online at www.irs.gov. 6. Year-End Processing:  Verify vendor data  Prepare 1099 forms  Submit one copy of 1099 to vendors by January 31 of the year following payment  Submit one copy of 1099 to IRS by February 28, unless filing electronically through the use of the Filing Information Returns Electronically (FIRE system) in which case the form must be filed by March 31st. 7. Make sure to consult with your tax or accounting professional. He or she will provide the most comprehensive 1099 processing advice. www.kdragonfly.com The Compliance Toolkit
  26. 26. It’s no longer a mystery. The Compliance Toolkit has demystified Independent Contractor Engagement and provided you the tools necessary to begin engaging Independent Contractors to grow your business. In addition to following the advice in the Toolkit, consult with your legal professional, your tax adviser and/or your accountant. Make sure to visit www.kdragonfly.com the next time you need help finding, screening and vetting your next Independent Worker. When you’re short on time, http://we’ll do www.the work kdragonfly.for you. We’ve com/incorporated http://www.a unique kdragonfly.vetting com/ process into each Independent (Guru) profile saving you time and reducing your risk. We are excited you are joining us on our mission to grow the Independent Workforce, one business at a time. Let’s get started toward this NewWay toWork! www.kdragonfly.com Summary
  27. 27. Appendix: Resources Contractor Agreement Sample Scope of Work www.kdragonfly.com W-9 Form 1099 Form
  28. 28. Sample Independent Contractor Agreement: . www.kdragonfly.com
  29. 29. INDEPENDENT CONTRACTOR AGREEMENT This Agreement is entered into by and between ___________________________. ("Company") and ______________, ("CONTRACTOR"), as an Independent Contractor. PURPOSE COMPANY is in the business of providing _________________________ www.kdragonfly.com services. COMPANY desires to engage CONTRACTOR to provide such services as an independent contractor of COMPANY. CONTRACTOR desires to work with COMPANY as an independent contractor. The parties, for and in consideration of the mutual and reciprocal covenants and agreements herein, do agree as follows: AGREEMENT 1. Compensation. CONTRACTOR shall be paid for his services as follows: ________________ _______________________________________________________________ ______________. All such compensation set forth above shall be reported to CONTRACTOR pursuant to a 1099 statement. 2. Term. This Agreement shall commence on _______ __, 201_, and continue until either party wishes to terminate this agreement by that party providing to the other party a 60 day advanced notice of its desire to terminate this agreement. 3. Services. CONTRACTOR shall provide the necessary services as directed by COMPANY and as set forth as follows: _____________________________________________ _______________________________________________________________ ________________. 4. Hold Harmless/Indemnification. CONTRACTOR agrees to indemnify, defend, and hold COMPANY harmless from and against any claim, demand, action, penalty, suit, or liability, including, but not limited to, attorney's fees and costs, which COMPANY may incur, pay or otherwise become responsible for arising from any negligent actions of CONTRACTOR in providing these services pursuant to this Agreement.
  30. 30. 5. Protection of Confidential Information and Trade Secrets. (a) Definition. “Confidential Information” means all nonpublic information concerning or arising from COMPANY’S business, including particularly but not by way of limitation trade secrets used, developed or acquired by COMPANY in connection with its business; information concerning the manner and details of COMPANY’S operation, organization and management; financial information and/or documents and nonpublic policies, procedures and other printed or written material generated or used in connection with COMPANY’S business; its business plans and strategies; the identities of the its clients and the specific individual client representatives with whom it works; the details of the its relationship with such clients and client representatives; the nature of fees and charges made to the its clients; nonpublic forms, contracts and other documents used in the its business; the nature and content of computer software used in its business, whether proprietary to it or used by it under license from a third party; and all other information concerning its concepts, prospects, clients, employees, contractors, earnings, products, services, equipment, systems, and/or prospective and executed contracts and other business arrangements. Confidential Information shall not include information (a) disclosed publicly in published materials, (b) generally known to the public, (c) that is now or subsequently becomes generally known to the public through no fault of CONTRACTOR, (d) independently developed by CONTRACTOR without the use of any Confidential Information provided by it and outside the scope of his duties as a subcontractor to COMPANY; (e) that is lawfully obtained from any third party unrestricted by any confidentiality requirements as to such information; or (f) that is released or approved for release by COMPANY. (b) CONTRACTOR’S Use of Confidential Information. Except in connection with and in furtherance of his work on COMPANY’S behalf, he shall not, without COMPANY’S prior written consent, at any time, directly or indirectly, use, disclose of otherwise communicate any Confidential Information to any person or entity. This nondisclosure covenant shall remain enforceable in perpetuity (so long, as such information remains Confidential Information), irrespective of the timing or circumstances of the termination of CONTRACTOR’S services. www.kdragonfly.com
  31. 31. (c) Acknowledgments. CONTRACTOR acknowledges that during the term of this agreement, CONTRACTOR will have access to Confidential Information which shall be made accessible to him/her only in strict confidence; that unauthorized disclosure of Confidential Information will damage the business; that Confidential Information would be susceptible to immediate competitive application by competitor of COMPANY, that its business is substantially dependent on access to and the continuing secrecy of Confidential information; that Confidential Information is unique to it and known only to CONTRACTOR and COMPANY, that COMPANY shall at all times retain ownership and control of all Confidential Information; and that the restrictions contained in this paragraph are reasonable and necessary for the protection of its business. (d) Records Containing Confidential Information. All documents or other records contingent or reflecting Confidential Information (“Confidential Documents”) prepared by or provided to CONTRACTOR are and shall remain COMPANY’S property. Except with its prior written consent, He shall not copy or use any Confidential Document for any purpose not relating directly to his/work on COMPANY’S behalf, or use, disclose or sell any Confidential Document to any party other than COMPANY. Upon the termination of this agreement or upon COMPANY’S request, CONTRACTOR shall immediately deliver to COMPANY or its designee (and shall not keep in his possession or deliver to anyone else) all Confidential Documents and all other property belonging to COMPANY. This paragraph shall not bar him from complying with any subpoena or court order, provided that he shall at the earliest practicable date provide a copy of the subpoena or court order to COMPANY. www.kdragonfly.com 6. Noncompetition. During the term in which CONTRACTOR is engaged in work with COMPANY, and for a period of twelve (12) months following final payment or after termination of services. (“The Noncompetition Period”), CONTRACTOR shall not, engage in employment or independent contractor work similar to that performed by COMPANY with COMPANY’S clients or customers, except with written authorization from COMPANY. CONTRACTOR shall not directly or indirectly, as an officer, director, employee, consultant, owner, shareholder, adviser, joint venture or otherwise, compete with any and all of COMPANY’S clients or customers. 7. Survival. CONTRACTOR’S obligations under Sections 5 and 6 shall survive the termination of his services and shall thereafter be enforceable whether or not such termination is later claimed or found to be wrongful or to constitute or result in a breach of any contract or of any other duty owed or claimed to be owed by COMPANY to CONTRACTOR.
  32. 32. www.kdragonfly.com 8. Remedies. CONTRACTOR acknowledges that upon a breach of any obligation under this agreement, COMPANY will suffer immediate and irreparable harm and damage for which money alone cannot fully compensate it. CONTRACTOR therefore agrees that upon such breach or threatened breach of any obligation under this agreement, COMPANY shall be entitled to a temporary restraining order, preliminary injunction, permanent injunction or other injunctive relief, without posting any bond or other security barring him from violating any such provision. This paragraph shall not be construed as an election of any remedy, or as a waiver of any right available to COMPANY under this agreement or the law, including the right to seek damages from him for a breach of any provision of this agreement, nor shall this paragraph be construed to limit the rights or remedies available under Colorado law for any violation of any provision of this agreement. The prevailing party in any litigation shall receive its reasonable attorney fees and costs incurred in such action. 9. Independent Contractor. CONTRACTOR is an independent contractor for COMPANY, and is not an agent, employee or representative of COMPANY, as agreed to and desired by both parties. CONTRACTOR agrees that he is obligated to report as income all compensation received by him pursuant to this Agreement, and he is responsible to pay all withholding taxes. CONTRACTOR agrees to complete the attached Contractor's Compensation and Tax Certificate by April 15, 201_, for the tax year 201_, and each year thereafter if that year is within the terms of this Agreement.. 10. Governing Law. This Agreement shall be governed and construed according to the laws of the state of Colorado. 11. Complete Agreement. This Agreement may not be changed except by a written instrument signed by the parties. This Agreement constitutes the complete agreement of the parties. 12. Severability. If any provision of the Agreement is declared by any court of competent jurisdiction to be invalid for any reason, such invalidity shall not affect the remaining provisions. The parties have executed this Agreement in duplicate on _______________________. COMPANY: ________________________________________. By:_________________________________________ __________________, its __________________ INDEPENDENT CONTRACTOR: _____________________________
  33. 33. Sample Scope of Work: . www.kdragonfly.com
  34. 34. www.kdragonfly.com Scope of Work: Business Name: Independent Contractor: Deadline: Scope Statement: Deliverables: Exclusions: Milestones (Project Name) Milestone Completion Date
  35. 35. Stakeholder Responsibility Type Description Cost Labor – Internal Labor – External Materials Hardware Software Total www.kdragonfly.com Stakeholders Project Cost Estimates Client Signature: Date: IC Signature: Date:
  36. 36. W-9 Form . Sample Form W-9 http://www.irs.gov/pub/irs-pdf/fw9.pdf www.kdragonfly.com
  37. 37. www.kdragonfly.com
  38. 38. 1099 Form . Attention: This form is provided for informational purposes only. Copy A appears in red, similar to the official IRS form. Do not file copy A downloaded from this website. The official printed version of this IRS form is scannable, but the online version of it, printed from this website, is not. A penalty may be imposed for filing forms that can’t be scanned. See part O in the current General Instructions for Certain Information Returns for more information about penalties. To order official IRS forms, call 1-800-TAX-FORM (1-800-829-3676) or Order Information Returns and Employer Returns Online, and we’ll mail you the scannable forms and other products. See IRS Publications 1141, 1167, 1179 and other IRS resources for information about printing these tax forms. www.kdragonfly.com
  39. 39. www.kdragonfly.com
  40. 40. www.kdragonfly.com Additional Resources: www.irs.gov For more information, refer to Publication 15-A (PDF), Employer's Supplemental Tax Guide, or Publication 1779 (PDF), Independent Contractor or Employee. If you want the IRS to determine whether a specific individual is an independent contractor or an employee, file Form SS-8 (PDF), Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding. http://www.irs.gov/pub/irs-pdf/p334.pdf CONTACT INFORMATION: WWW.KDRAGONFLY.COM E-MAIL: INFO@KDRAGONFLY.COM P: 970-325-5080 KDRAGONFLY TWITTER ACCOUNT KDRAGONFLY FACEBOOK ACCOUNT KDRAGONFLY LINKEDIN ACCOUNT