Many businesses choose to hire independent contractors for their services rather than hire full-time employees. This is especially the case if they need one-time help with a project or occasionally need outside help.
Services agreements are standard in the world of independent contractors and freelancers. However, if the independent contractor, who can be an individual or a company, is located outside of the US, you need an Outsourced Services Agreement.
There are several reasons some businesses decide to outsource projects to the workforce of other countries. For one, a company might need a particular service that only a company or person without the US can perform. Or, more commonly, foreign services provided can be less expensive, perhaps significantly so. The Outsourced Services Agreement is especially beneficial to smaller companies without many employees and can't afford US-based independent contractors.
Depending on your state, an Outsourced Services Agreement may also be known as:
Any company may choose to outsource some of its work or projects. Whether it happens only once or regularly, the company will need an Outsourced Services Agreement to ensure everything is carried out according to the law.
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All service agreements should contain essential provisions protecting both the client and the service provider. If you are not sure where to start, it is probably best to use a template to guide you through the process.
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The client and the service provider must sign the document for it to be legally enforceable. Notarization of signature witnessing is not necessary but can make the form harder to contest.
After signing, it is customary for both parties to keep a physical copy of the document. Securing your copy of the Outsourced Services Agreement is essential if you have to prove or enforce the contract's provisions in the event of a dispute.
A service agreement puts down in no uncertain terms all the services that the client ordered and the contractor agreed to perform. On the other hand, a bill of sale is like a receipt or invoice that documents the transaction of goods. In most cases, a bill of sale (as opposed to the aforementioned receipt) is used in the sales of more valuable items like cars. A service agreement and a bill of sale can be used in combination in a single job.
The difference between an independent contractor and an employee mostly revolves around the law. For example, there are federal and state minimum wages and various overtime regulations that must be offered to employees, but not an independent contractor. By law, both the employer and the employee have to pay payroll taxes, with the latter also having the federal and state income taxes withheld. As for an independent contractor, unless the annual income exceeds a certain amount, he or she does not have to prepay taxes.
Most jobs can be outsourced; it is just a matter of practicality. Some of the professions that are often outsourced are web designers and programmers. A profession that was previously commonly outsourced to other countries was the telephone customer service rep – “previously” because it is not as common anymore.
If a person or a business is to hire an independent contractor, it would make sense for the person or company to protect themselves through the use of an independent contractor confidentiality agreement. For the service provider to perform his or her job as ordered, he or she may have to be privy to sensitive information that the client will want to keep secret. This agreement prevents the service provider or independent contractor from disclosing confidential information at the threat of litigation.
A services work order may accompany a service agreement of any kind as additional job orders. You can use a services work order on top of a service agreement.
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