At the end of the day, hiring a contractor is a big investment. You want to make sure that you’re hiring the right contractor for the job and that the contractor is able to complete the job to the specifications and requirements of your project.
While there are many things you can do to prepare for hiring an independent contractor, there is no single “recipe” that works for everyone. However, there are some key steps that you can take that will help make the process easier.
Documents And Tax Forms Required While Hiring An Independent Contractor
1. Form W-9
The IRS Form W-9 is a voluntary tax form that you can use to hire independent contractors. The W-9 is different from the IRS 1099 tax form because it only needs to be filed once by the contractor. The company sends a blank Form W-9 to the contractor and the contractor needs to put in their details and return it.
The Form W-9 should contain the following things:
- Name – and a business name
- Address
- Taxpayer Identification Number
2. Form 1099-NEC
Once the client has the W-9 Form, they can utilize the information in it to submit the Form 1099-NEC. The Form 1099-NEC is used to determine taxable income received by contractors and freelancers. The IRS Form 1099-NEC is used to report payments an organization made to an independent contractor within a tax year. An organization will be required to submit this form till the time it pays more than $600 to an independent contractor in a tax/calendar year.
3. Require a Contract
A contract is always a good idea when hiring any type of contractor, and it’s especially important when hiring an independent contractor. The contract should outline the expectations and responsibilities of both the contractor and the hiring company.
4. Contractor’s Licensing And Insurance
It’s important to verify that the contractor is licensed and insured in the state where the work will be performed.
Additional Agreements With Independent Contractors
1. Check References
Be sure to check references before hiring an independent contractor. Ask for contact information for past clients or employers and call them to inquire about the contractor’s work ethic, communication skills, and overall success.
2. Verify Insurance
Verify that the contractor has up-to-date insurance, including liability insurance, in the event that any damages are caused during the project.
3. Ask About Business Sense
Ask the contractor about his or her business sense and whether they have experience managing their own projects. This will help you gauge how well the contractor will be able to handle the project on their own.
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