Q: What do I need to do when I hire my first freelancer?
Know the essential paperwork for onboarding a new freelancer.
When you hire new freelancers, there are several documents that every freelancer should complete before any work commences. With a freelance management system, you can standardize this onboarding process, making it easy to quickly onboard freelancers while ensuring that you have all the necessary paperwork completed. These documents are critical not only for providing legal recourse in the case of any issues, but ensuring that your company is compliant with federal and state requirements.
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Master Services Agreement (Contract) and Work Order / Statement of Work
Prior to starting work with any freelancer or contractor, we recommend ensuring that you have an independent contractor agreement in place. An independent contractor agreement is a legally binding document that outlines the working relationship and the end product(s) to be delivered by the independent contractor. You may want to consider setting up a Master Services Agreement as your over-arching agreement when hiring a freelancer. A Work Order (WO) or Statement of Work (SOW) details the work, timelines, budget, etc., for each project with the freelancer. These documents are essential in case of questions or potential disagreements after work starts.
All 1099 workers, which includes freelancers, must complete a W-9 form. This Internal Revenue Service (IRS) form is used to verify the person or business entity’s name, address, and Taxpayer Identification Number (TIN). The TIN may be a Social Security Number or an Employer Identification Number (EIN). Once the information has been validated, the document should be securely stored for at least four years. The information from the W-9 forms will be needed at the end of the year to complete Form 1099-MISC for your freelancers and contractors.
Non-Disclosure Agreement (NDA)
Depending on the nature of the work and any company information being disclosed, you may also wish to have the freelancer sign an NDA. An NDA is a legally binding document that ensures clarity on what information should be confidential.
Just as with any vendor, ensuring that you are set up to pay freelancers promptly is essential to building a long-term relationship. Make sure that you have collected the necessary information for your accounts payable team to process and pay invoices.
Liquid makes onboarding freelancers, contractors, and vendors easy. You can either use our templates or your customized documents to start projects quickly.
Ready to simplify managing your independent contractors, freelancers, and vendors? Sign-up to try Liquid today.
Category: Compliance Freelancer Management Ask Liquid
Updated: September 24, 2020
Quick note: This is not to be taken as tax advice or legal advice or payroll advice. Since tax rules and laws change over time and can vary by location and industry, consult a CPA / tax advisor and/or attorney for specific guidance.