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PLEASE READ AND SIGN - IRS 20 PointsOff of the IRS website. The IRS uses 20 common law factors on a case by case basis to determine whether aworker is an independent contractor. Not all factors must apply or bear the same weight. Many are more orientedtoward construction contractors rather than professional service providers.A Consultant:
1.
Receives No Instructions
Contractors cannot be required to follow specific instructions to accomplish a job. However, you can provide job specifications and/or guidelines. Be careful no to require a procedure.
2.
Receives No Training
Contractors cannot be trained by the hiring firm. They must use their own meansto accomplish the work. You can provide an orientation to your environment or product, but notfunctional training.
3.
Performs Work that is not Fundamental to the Success or Continuation of the Business
Contractor services should not be an integrated part of the business operations of the employer on an ongoing,regular basis.
4.
 
Is Not Required to Perform Services Personally
Contractors are hired to provide a result. If they canuse others to do the actual work, this demonstrates the employer’s lack of control over the means of achieving the result.
5.
Hires and Controls His/Her Own Assistants and Subcontractors
Contractors should hire, supervise,and pay assistants and subcontractors at their sole discretion, not at the direction of the hiring company.
6.
Has no Continuing Relationship
Usually contractors do not have a continuing relationship with a hiringcompany. You may want to reconsider your approach for any project significantly longer than a year.
7.
Establishes an Independent Work Schedule
Contractors set their own work hours. You should notdictate specific hours schedules, or require detailed time sheets or it could be viewed as exercising toomuch employer control over the consultant.
8.
Pursues Other Work 
Contractors should be permitted to work when and for whom they choose. Youmust not preclude them from pursuing the development of their business while on your assignment(although the nature and scope of the job may, in fact, occupy all their time).
9.
Controls Their Job Location
Contractors should control where they work. You should not require thatthe consultant work on site, unless there are confidentiality or date access issues. You may want toencourage the consultant to work form his/her office as much as possible.
10.
Establishes Order of Work 
Contractors should not receive instructions concerning work order andsequence. Since they are responsible for the result, they determine the activities needed to complete it.
11.
Provides No Interim Reports
Contractors should not be required to submit progress or interim reports.Contractors may volunteer status information. Alternatively, projects can be split into more discrete phases, payment for which is dependent on satisfactory completion.
12.
Receives Payment by Job
Contractors are typically paid by the job, not on an hourly, weekly of monthly basis.
13.
Pays Business Expenses
Contractors are generally responsible for their own business expenses. Thisdoes not preclude billing clients for out of pocket expenses for a project. However, direct businessdevelopment and overhead expenses should not be recouped.
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14.
Supplies Tools and Materials
Usually contractors furnish their own tools and materials, and do not usethose furnished by the hiring company. (This is seldom an issue for professional services consultants.)
15.
Makes a Significant Investment in Their Business
Contractors should have an adequate investment intheir business and not use the hiring company’s facilities. For example, they should have their ownoffice, rather than a regular office at you company. **
16.
Realizes Profit or Loss
A contractor normally takes real economic risk that the project will not result ina profit, by assuming responsibility for subcontractor payments, office overhead and the like.
17.
Works for Multiple Firms
Contractors often work for a multiple of unrelated persons or firms at thesame time, and should not be restricted by the hiring company from doing so. You should not require anexclusive relationship.
18.
Makes Services Available to the General Public
Contractors make their services generally available.For example, they have an office, a business license; they advertise their services and make themselvesavailable through interim management networks, like the M Squared network.
19.
Works until Job Completion
Contractors cannot be fired so long as they do not breach the contract. Non-performance results in a breach of contract.
20.
Receives Compensation for Completion of Work 
Contractors are responsible for the satisfactorycompletion of a job or they may be legally obligated to compensate the hiring firm for failure tocomplete.
NOTE:
The courts have not assigned weights to these factors, but those most often cited concern control of the methods used to accomplish the work, i.e.: 1-5, 7, 9, 10, and 11. Other factors which appear crucial arewhether the consultant offers services to the general public or supplies his/her own tools and work place. If you find one key factor or three of the other factors do not apply to this consulting engagement, you may be better treated as an employee rather than an independent contractor.*The characterization of a consultant as an independent contractor when it is deemed an employee by governmentauthorities can have severe implications for the employer, including financial responsibility for past withholdingof state and federal taxes, unemployment benefits, workers compensation benefits, health benefits and socialsecurity benefits, and penalties of up to 100% of amounts due.Our companies insists that contractors be incorporated.Please send applicable proof of insurance.AGREEMENTWith this signature, I am declaring that I am consulting via an incorporated business and that my company isoperating in accordance with US law. __________________________________ Signature Date _______________________ Print Name
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