If you have individuals or businesses working for your company in a capacity as an independent contractor, it is a best practice to have a written independent contractor agreement that lays out the terms of the agreement. A written agreement helps to corroborate your position that these individuals are independent contractors and not employees of your company. From a U.S. tax compliance perspective, there are IRS reporting obligations for these payments. If you pay a contractor nonemployee compensation that exceeds $600 during the year, you must file a Form 1099-MISC which reports the compensation. In order to accurately complete the Form 1099-MISC, the individual should provide you with a completed and signed Form W-9. Typically the Form W-9 is completed and signed contemporaneously with the signing of the independent contractor agreement.
