Independent contracting is a type of business in which a government or other client firms come into agreement with normally a small business or individual to perform work that could have been done in-house by its employees. In California, Phillip Romero, PhD, Professor of Finance, University of Oregon, did a study. He found out that independent contractors are important and determining factor of economic strength and growth.
There are different guidelines set for individuals and small businesses on contracts. They should be followed to enable them retain their status as independent contractors and not employees. They should be able to retain control of the work they are given.
This is achieved by scheduling working hours within the deadline. Furthermore, they should set paying and supervising any workers or assistants hired. They should have own working station unless it is agreed to work from the firms premise and not asking for instructions from the hiring firm.
This guideline is important because it clearly shows the difference between independent contractors and employees. The employees are told exactly what to do and how to do it by their employers. This is not the case where independent contractors are concerned.
Profit and loss making is a sign used to show that contractors can operate independently. Small businesses and individuals should be able to show that they incur running costs for the business. This can be proved using receipts showing rent payment, internet service payment, pay slips, and receipts for buying machines and equipment. The contractor is able to know if they are likely to make a profit or loss when preparing the invoice.It's better to have an all-inclusive invoice at the end of the project that has total expenses, than daily billing to the hiring firm to avoid reducing the profit margin due to low charges.
Wider services provision is also vital. The independent contractors should not focus on marketing their services to an individual or one company. Intense marketing should be done by the contractors getting well designed business cards and letter heads, signing up in different professional organizations, getting a website, appearing in telephone and postal directories, attending trade exhibitions, cold calling of prospective clients and print advertising via newspaper, journals or magazines. The more customers independent contractors have the less their status is questioned.
A written agreement is important to show the contract between the hiring firm and the independent contractors. This document should in a clear manner say that the services are being offered to the firm by an independent contractor. It should also state that the major objective is getting the project done within the stipulated period without any interruptions from the hiring company. The contractors should confidently state that they are not employees.
There are different guidelines set for individuals and small businesses on contracts. They should be followed to enable them retain their status as independent contractors and not employees. They should be able to retain control of the work they are given.
This is achieved by scheduling working hours within the deadline. Furthermore, they should set paying and supervising any workers or assistants hired. They should have own working station unless it is agreed to work from the firms premise and not asking for instructions from the hiring firm.
This guideline is important because it clearly shows the difference between independent contractors and employees. The employees are told exactly what to do and how to do it by their employers. This is not the case where independent contractors are concerned.
Profit and loss making is a sign used to show that contractors can operate independently. Small businesses and individuals should be able to show that they incur running costs for the business. This can be proved using receipts showing rent payment, internet service payment, pay slips, and receipts for buying machines and equipment. The contractor is able to know if they are likely to make a profit or loss when preparing the invoice.It's better to have an all-inclusive invoice at the end of the project that has total expenses, than daily billing to the hiring firm to avoid reducing the profit margin due to low charges.
Wider services provision is also vital. The independent contractors should not focus on marketing their services to an individual or one company. Intense marketing should be done by the contractors getting well designed business cards and letter heads, signing up in different professional organizations, getting a website, appearing in telephone and postal directories, attending trade exhibitions, cold calling of prospective clients and print advertising via newspaper, journals or magazines. The more customers independent contractors have the less their status is questioned.
A written agreement is important to show the contract between the hiring firm and the independent contractors. This document should in a clear manner say that the services are being offered to the firm by an independent contractor. It should also state that the major objective is getting the project done within the stipulated period without any interruptions from the hiring company. The contractors should confidently state that they are not employees.