An independent contractor agreement—also known as a 1099 agreement or freelance contract—is a contract between a client willing to pay for the performance of services by a contractor (person, sole-proprietor, or single-member LLC) who is willing to perform the services. Under the Internal Revenue Code (26 U.S.C. §3509), an independent contractor is not an employee, and the client hiring an independent contractor is not responsible for tax withholdings and payment of FICA taxes. An independent contractor agreement should be in writing, and will usually address issues such as the (1) scope of the work (description of the services); (2) terms and length of the project or service; (3) payment details, including fee deposits and billing procedure; and (4) confidentiality, non-solicitation, and dispute resolution clauses.

In North Dakota, as in other states, an independent contractor agreement is a legal document that outlines the terms of a working arrangement between a client and a contractor who is not considered an employee. This distinction is important for tax purposes, as outlined in the Internal Revenue Code (26 U.S.C. §3509), which specifies that clients are not responsible for withholding taxes or paying FICA taxes for independent contractors. In North Dakota, it is advisable for the agreement to be in writing to clearly establish the nature of the relationship and the expectations of both parties. The written contract typically includes details such as the scope of work, project duration, payment terms, and clauses related to confidentiality, non-solicitation, and how disputes will be resolved. While state statutes do not prescribe a specific format for these agreements, they must comply with general contract principles and relevant federal and state tax laws. It is important for both parties to understand their rights and obligations under the agreement to avoid misclassification issues and ensure compliance with applicable laws.