Independent Contractor Agreement

[David Roth weiss]

Bill,

I think these days it’s a very, very good idea to get in the practice of using IC agreements for all freelancers. If they don’t pay their required taxes you can get absolutely hammered.

I have a copy of an IC agreement that I can send you. Write me privately at: drw at drwfilms dot com, and I’ll send it your way.

David

David Roth Weiss
Director/Editor/Colorist
David Weiss Productions, Inc.
Los Angeles

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[Brendan Coots]

If you’re not using contracts with both clients and contractors, you won’t be in business long. Good idea on your part to start using them, there’s no reason a contract should make things any less “easy going” or somehow corrupt your company culture.

As a purely anecdotal example of why this is so important, a post house I used to freelance for many years ago recently got nailed by the IRS because one single independent contractor tried to file for unemployment after the job ended (“you’ll never work in this town again” comes to mind…). Every IC the studio ever used was up for review as to whether they were legit ICs or just misclassified employees. We all got calls or letters, and I know for a fact the studio wasn’t using subcontractor agreements that spelled things out. The studio head called me and we had a pretty good chat about it, although I could tell he was freaked out and facing hundreds of thousands in back taxes. I’m sure they did end up having to pay back payroll taxes, for every IC found not to be properly handled, going back several years. Ouch.

Brendan Coots
Splitvision Digital
http://www.splitvisiondigital.com

[Ned Miller]

I too have many IC agreements I had to sign as a DP that I can fax you. Go to https://www.nedmiller.com or https://www.bizvideo.com and hit the email button.

However, I personally know that IC agreements will not keep the IRS from considering your freelancers employees. Rather, it is more protection as a work-for-hire status in case the vendor (freelancer) claims part of the copyright or wants to use the footage for themselves, like DPs may want to do.

The reason I know they are useless in regards to protection from withholding taxes: I had a working relationship with two prod companies who were audited and the IRS does not care about ICs to establish freelance status. They have a checklist, about 12 items long that determines whether someone is an employee or IC. Stuff like: Does the producer tell him when to show up? Does the producer supervise his work? Does the producer provide the tools (like rent the grip truck)? Does the freelancer bill hourly? etc. Whatever you do, never allow a non-incorporated freelancer to put the word Overtime on their invoice!!!!! That last sentence may be the best advice you ever saw on the internet. The word Overtime firmly establishes in the eyes of the IRS that the person is an EMPLOYEE (meaning you should have withheld taxes) regardless of an IC they signed.

So you can see that just a signature on an IC agreement means nothing to them, remember they are responsible for so much in taxes and fines per audit hour. When all factors are equal hire the INCORPORATED crew member over the non-incorporated. The IC agreement may help if someone gets injured on your job IF you have a Workers Comp policy, but it is useless, from what I’ve seen, for protection in establishing someone as a “freelancer”. Only the IRS determines that.

I don’t know much about tax and legal issues but I do know about this IC angle.

Ned Miller
Chicago Videographer
http://www.nedmiller.com
http://www.bizvideo.com