A contractor agreement—also known as an independent contractor agreement, 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. A 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, hourly rate, and billing procedure; and (4) confidentiality, non-solicitation, and dispute resolution clauses.

A contractor may also operate as a corporation or multi-member limited liability company, for example, and the contractor agreement with such an entity will be similar to an agreement with an individual who is an independent contractor.

In Montana, a contractor agreement is a legally binding document between a client and a contractor, where the contractor agrees to provide services in exchange for payment. This type of agreement is essential for defining the relationship as one of independent contractor status rather than employment, which has significant tax implications under the Internal Revenue Code (26 U.S.C. §3509). In Montana, as in other states, the contractor is responsible for their own tax withholdings and payment of FICA taxes, not the client. The agreement should be in writing to clearly outline the scope of work, project duration, payment terms, and other key provisions such as confidentiality and dispute resolution. These agreements are applicable whether the contractor is an individual, sole proprietor, single-member LLC, corporation, or multi-member LLC. It's important to ensure that the agreement complies with Montana state law and accurately reflects the intentions of both parties to avoid any potential misclassification issues.