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 North Carolina, a contractor agreement is a legally binding document between a client and a contractor, where the contractor is engaged to perform services as an independent contractor rather than as an employee. This distinction is important for tax purposes, as outlined by the Internal Revenue Code (26 U.S.C. §3509), which exempts the client from withholding income taxes and paying FICA taxes for an independent contractor. In North Carolina, while there is no specific statute mandating that contractor agreements must be in writing, it is highly advisable to have a written contract to clearly outline the terms of the service arrangement. A comprehensive contractor agreement typically includes the scope of work, project duration, payment terms, and clauses related to confidentiality, non-solicitation, and dispute resolution. These agreements can be made with individuals, sole proprietors, single-member LLCs, corporations, or multi-member LLCs operating as contractors. Having a written agreement helps to ensure clarity and protect the interests of both parties, and it can be particularly important in the event of a dispute.