To write a service contract, determine the services to be provided, the payment details, who handles paying the expenses, and who provides the materials, tools and working space, according to Nolo. Include the length of the agreement and the events that may lead to contract termination.
A written service agreement serves as a protection for an independent contractor in the event that a client fails to pay or refuses to adhere to the terms of the agreement, states Nolo. It helps prevent misunderstandings and aids the contractor in convincing a court if a dispute arises. The agreement also establishes that the service provider is an independent contractor and not an employee of the client, which is an essential piece of information to provide to the IRS and other government agencies.
Payment details usually specified in a service contract include the amount, mode and time of payment, such as a set fee for the entire service, an hourly rate, an upfront payment or installments, says Nolo. Independent contractors typically handle paying expenses and provide their own equipment and office space.
State your independent contractor status, and mention that you have the required licenses and permits to perform the agreed services, suggests Nolo. Write that you have a liability insurance and that you’re responsible for paying your state and federal taxes.