Contractor Agreements: How to Do It Right

Well-drafted contractor agreements outline scope, deadlines, IP ownership, and payment terms—protecting your startup’s interests and reducing misclassification risk.

Why it Matters

Contractors can help your startup scale fast — but without a clear, written agreement, you risk IP disputes, misaligned deliverables, and even legal liability.

Founders Checklist

Sign a Contractor Agreement before any work begins
Define clear scope of work (SOW), deliverables, and timeline
Include independent contractor status language
Add IP assignment and confidentiality clauses
Set payment terms (hourly, milestone-based, retainer)
Revisit classification if they start acting like employees

Founder Fails

Used no agreement > contractor claimed IP ownership
Paid lump sum with no deliverables defined > poor work, no recourse
Hired full-time contractor > later reclassified as employee by IRS

When to ask for Help

efore hiring freelancers or independent contractors
If including IP, confidentiality, or termination clauses
When extending or renegotiating contractor terms
If onboarding international contractors
When a contractor begins behaving like an employee

Frequently Asked Questions

Q: Do I need a lawyer to draft a contractor agreement?
A: Not necessarily — but use a vetted template and don’t skip IP ownership and liability sections.

Q: Can I pay contractors in equity?
A: Yes, but you’ll need a separate advisor or consultant equity agreement. Talk to your lawyer or use a plan with clear vesting.

Q: What if the contractor is international?
A: Add clauses for governing law, jurisdiction, and export control. Use compliant global platforms if needed (e.g. Deel, Remote).