Independent Contractor Agreement South Carolina
The independent contractor agreement South Carolina process is between a client who pays an independent contractor for their services.3 min read
2. Essential Elements of a South Carolina Independent Contractor Agreement
3. About Independent Contractor Status
4. Worker Classification
The independent contractor agreement South Carolina process is between a client who pays an independent contractor for their services. Unlike an employer-employee relationship, where the payer has a say in how the services are accomplished, an independent contractor chooses the work method as long as the final product meets the requirements agreed upon with the client.
About a South Carolina Independent Contractor Agreement
To avoid confusion regarding the responsibilities of the client and the independent contractor, a South Carolina independent contractor agreement outlines the following:
- The due date of the services being rendered.
- The monetary compensation.
- The status of the contractor.
To clarify, an independent contractor agreement sets out the terms between the contractor and the hiring person or business. It clarifies that a worker has the status of an independent contractor versus that of an employee/employer relationship.
Essential Elements of a South Carolina Independent Contractor Agreement
When drafting an independent contractor agreement, there are essential terms/descriptions that should be included, such as:
- A clear description of the duties and services the independent contractor and the client have agreed to.
- A clarification of by what method the hiring party will pay the independent contractor, when they will pay the contractor, and how much the contractor will be paid.
- A statement of who has the responsibility for expenses as well as the responsibility for providing office space, equipment, materials, and supplies.
- A statement verifying that the independent contractor has liability insurance and how long the independent contractor's services will be needed (i.e., a week, month, season, or until the work is completed).
- A statement addressing under what circumstances the independent contractor can terminate the agreement.
- A description of how both parties will proceed to resolve a dispute.
- A statement that both parties are in agreement about the independent contractor relationship.
- A statement validating that the independent contractor has all applicable permits and licenses required by the state to perform the specific work.
- A statement noting that the contractor will pay taxes.
- A statement that establishes the independent contractor is not entitled to receive any benefits from the person or business contracting their services.
About Independent Contractor Status
When the term "1099" is used in business, it is usually referring to someone who works as an independent contractor. The term "1099" is from the Internal Revenue Service (IRS). A 1099 form is issued to independent contractors instead of a W-2, which must be filed at the end of the tax season.
Under South Carolina law, there is no established definition for "independent contractor." The general definition has been developed by case law in the state to mean anyone who:
- Exercises independent employment.
- Contracts to do work according to the contractor's preferred methods.
- Is not controlled by their employer except when work is completed.
To put it simply, an independent contractor is hired for a specific job, project, or service but not as an employee. An example would be two individuals hired to do a plumbing job. One works set hours in the office and drives a company truck and uses the company's tools. This person is an employee. The other has no set hours, does not have to come to the company office, drives their own truck and uses their own tools, and is not told when or how a job must be completed. This person is an independent contractor.
Both federal and state government agencies are interested in how workers are classified. The IRS needs to know because of withheld income tax, Social Security taxes, Medicare taxes, and unemployment taxes and who will be responsible for paying these taxes.
At the state level, the government needs to know how a worker is classified for the purpose of workers' compensation. If an employee is injured on the job, the responsibility lies with the employer for the injured party. As an independent contractor, the responsibility for payment in the event that the independent contractor is hurt falls on the individual.
To be eligible for workers' compensation in South Carolina, an employer-employee relationship is required according to the state's Supreme Court. Workers' compensation benefits only apply to injuries suffered by South Carolina workers. Independent Contractors are not included.
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