An independent contractor agreement—also known as a 1099 agreement or freelance contract—is a contract between a client willing to pay for the performance of services by a contractor (person, sole-proprietor, or single-member LLC) who is willing to perform the services. Under the Internal Revenue Code (26 U.S.C. §3509), an independent contractor is not an employee, and the client hiring an independent contractor is not responsible for tax withholdings and payment of FICA taxes. An independent contractor agreement should be in writing, and will usually address issues such as the (1) scope of the work (description of the services); (2) terms and length of the project or service; (3) payment details, including fee deposits and billing procedure; and (4) confidentiality, non-solicitation, and dispute resolution clauses.
In Texas, an independent contractor agreement is a legal document that outlines the terms of a working arrangement between a client and a contractor, who is not considered an employee under federal law (26 U.S.C. §3509). This distinction is important because it means the client is not responsible for withholding taxes or paying FICA taxes for the contractor. The contractor is responsible for their own tax obligations and may receive a 1099 form for tax reporting purposes. A well-drafted independent contractor agreement in Texas should clearly define the scope of work, the duration of the project or service, payment terms including any advance fees or billing procedures, and clauses related to confidentiality, non-solicitation, and how disputes will be resolved. While Texas law does not mandate that these agreements be in writing, it is highly advisable to have a written contract to provide clarity and legal protection for both parties involved.
