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 Washington State, a contractor agreement is a legally binding document between a client and a contractor, where the contractor can be an individual, sole proprietor, single-member LLC, corporation, or multi-member LLC. This agreement outlines the terms under which services will be performed, independent of an employment relationship. As per federal law, specifically the Internal Revenue Code (26 U.S.C. §3509), an independent contractor is distinct from an employee, meaning the client is not responsible for withholding taxes or paying FICA taxes for the contractor. The written agreement typically includes the scope of work, project duration, payment terms, and clauses related to confidentiality, non-solicitation, and dispute resolution. It's important for both parties to clearly define the nature of the relationship and the expectations to avoid misclassification issues and ensure compliance with both state and federal regulations.