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Independent Contractor Clause

The goal of that clause is to define the nature of your working relationship, and it applies regardless of your business structure (sole proprietor, LLC, etc.).

  • Independent Contractor Relationship: This is a crucial clause for your project. It legally defines that you are not an employee of the client, protecting both parties from tax and liability issues. It's an essential element for a freelancer or LLC.

  • No Poaching/Non-solicitation: Given you have a team, this is a good addition. It prevents the client from hiring your team members directly during or after your work relationship, protecting your business.

Independent Contractor Relationship.

The relationship between BUILD then MARKET, LLC (“Service Provider”) and Reward Realty Group (“Client”) shall be that of an independent contractor. Nothing in this Agreement is intended to, or shall be construed to, create a partnership, agency, joint venture, or employment relationship between the parties.

Service Provider shall retain sole and absolute discretion over the manner and means of carrying out the services hereunder, including the right to determine the number of personnel required and the identity of those personnel, who may be employees or subcontractors of Service Provider.

Service Provider is solely responsible for all costs and expenses related to its operations and its personnel, including but not limited to, compensation, benefits, and all applicable payroll taxes, social security, federal, state, and other employment-related taxes and contributions. Client shall not be responsible for any of these costs, nor shall Service Provider’s personnel be considered employees or agents of Client for any purpose.

Service Provider agrees to indemnify and hold harmless Client from any and all claims, liabilities, or expenses arising from the actions or omissions of Service Provider’s employees, agents, or subcontractors.

These obligations shall survive the termination of this Agreement.

worker classification​

which is a crucial legal distinction. It tells the client's business that you are not an employee and, therefore, they are not responsible for:

  • Withholding payroll taxes (Social Security, Medicare).
  • Providing employee benefits (health insurance, retirement plans).
  • Paying unemployment insurance taxes.

The LLC's Role vs. The Contract's Role 🛡️​

  • Your LLC is a separate legal entity from you as an individual. Its primary purpose is to protect your personal assets from business liabilities. It's an internal-facing document that governs your business, not your relationship with a client.
  • The Independent Contractor Clause in your contract is an external-facing document. Its purpose is to define your working relationship with the client and ensure that both parties are clear on their tax and legal obligations.

The existence of your LLC supports your status as an independent contractor, as it demonstrates that you are a business operating on your own behalf. However, the clause is what formally states this relationship in the specific context of the contract. You would include this clause even if you were operating as a sole proprietor to protect yourself and your client from any confusion.

The relationship between your marketing agency LLC and the client's business is still an independent contractor relationship. This remains true even if you've hired your own team. Your internal business structure doesn't change the nature of your external relationship with the client.

Independent Contractor vs. B2B​

The terms B2B (business-to-business) and independent contractor are not mutually exclusive. They describe different aspects of the same relationship.

  • B2B is a broad commercial term that simply means one business is selling to another business.
  • Independent Contractor is a specific legal and tax classification that defines the working relationship.

By classifying your relationship with the real estate business as an independent contractor, your contract clarifies that you are not their employee and that they are not responsible for your team.

Your Business as the Contractor​

In this scenario, your LLC is the single independent contractor hired by the real estate business. You, as the owner of the LLC, are then the employer of your new team, regardless of whether you classify them as employees or independent contractors. This means you are responsible for their compensation, taxes, and the legality of your arrangement with them.

Changing the clause from "Consultant" to "Service Provider" is a simple and effective adjustment. It makes the language more general and applicable to your business. The reason "agency" is included is due to its specific legal meaning, which is distinct from the other terms.

Why "Agency" Is Included​

In legal terms, "agency" has a very specific meaning that is separate from the other relationships you mentioned. Including it in the clause is a crucial part of legally defining the relationship and avoiding unintended consequences.

  • Agency Relationship: An agency relationship is created when one party (the agent) is authorized to act on behalf of another party (the principal) and bind the principal to contracts with a third party. For example, a real estate agent acts as an agent for their client (the principal) to negotiate a home sale. If you were your client's "agent," you could sign contracts, make financial commitments, or take other actions on their behalf, binding their business to the outcome.

The reason you include "agency" in the clause is to explicitly state that you do not have this power. You are providing a service to the client, but you do not have the authority to act on their behalf with third parties. This is a very important distinction that limits your legal power and protects the client from your actions.

The other relationships are distinct:

  • Partnership & Joint Venture: These are created when two or more parties agree to share profits and losses from a business venture.
  • Employment Relationship: This is a legally defined relationship where one party (the employee) works under the control and direction of another (the employer).

All four of these legal relationships carry different liabilities and obligations. By explicitly stating that none of them apply, the clause provides a comprehensive and clear definition of your business's limited role, protecting both you and the client.