What’s the most basic way to protect yourself in a work-for-hire situation? A contract. It will spell out exactly what the expectations are on each side of the table and what will happen if either of you don’t come through on your part of the deal. Any written correspondence can work as a written agreement in a pinch — like an email or physical letter — but contracts are still the way to go.
Anyone you want to work with who insists on not using contracts is probably not someone you should work with. Your best bet is to come up with a boilerplate contract for your business’ subcontractors and add or subject language depending on the situation. And if you’re using the contract that they are providing, be sure to read it thoroughly before agreeing to anything. Remember this is going to be your insurance policy just in case anything goes wrong with the relationship.
Another good way to avoid being scammed by an independent contractor is to make progress payments instead of one large sum. This is especially important for long term assignments or high cost projects. The idea is that you break the project into stages and make a payment once each stage has been completed, starting with an initial deposit.
Let’s use a website development project as an example. You get a proposal from the contractor that you approve and you make a deposit payment. Then, perhaps they’ll do the basic format of the site and you’ll make another payment. When they have uploaded all of your content and photos, you’ll make another payment. When you’ve given your final sign off on any odds and ends, you’ll make the last payment and the project will be over. If at any point during the project, your contractor flakes on you, you have only paid for the part you’ve received up to that point.
Read the full story at How to Protect Yourself When Working with Independent Contractors