Given a 1099, Should I Ask Them To Sign Contract? 4

[PengStruct]

Dear wise people:

I'm a new sole proprietor providing structural engineering and a local sign shop has agreed to my fees for several small projects. Basically I'll be designing/reviewing their shop drawings and stamping them. They are also asking for me to fill out a W9 form which I gather means they are treating me as a subcontractor. I'm not familiar with that process tax wise but I think its just another form to fill out at the end of the year?

They also said that they do not want to sign my standard agreement but do want a certificate of my insurance. Should I push them to sign my agreement? If so, with so many small projects it will be tiresome to draft a seperate proposal for each project and have them sign everytime. Is there a way to draft an initial agreement that will cover each project going forward?

Any advice will be much appreciated!

 

[cvg]

its called a Master Services Agreement (MSA), covering all work and general conditions with a client. subsequent jobs are task orders with a negotiated scope and fee with a corresponding notice to proceed or purchase order from the client. its common in the industry and they should not hesitate to sign it.

http://en.wikipedia.org/wiki/Master_service_agreements

 

[IRstuff]

Without a contract, how would you know that you've done the work expected, and can be paid? What's to stop them from reneging on the agreed to fees?

As for the W9, it definitely implies a non-employee relationship, but you have the responsibility, therefore, to work the SS/Medicare, FUTA, and SDI taxes yourself. And, to top that off, you potentially lose a month to file taxes for your company because some are due March 15.

TTFN
faq731-376

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[RacingAZ]

Just like what CVG stated, you do an MSA then simply ask for a PO for each project for the agreed on fee.

You tell them that your insurance carrier requires a written contract to get coverage whether it's an MSA, your company's standard contract or theirs.

 

[zdas04]

Most accounting software requires the W-9 data to be input before it allows a potential payee to be set up. That is so they can generate 1099-misc forms at the end of the year. IRS has a version with on-line forms that is easy to fill out at the keyboard (instead of handwriting it).
No big deal and I always figure that anything I can do to facilitate getting paid is worth doing.

As to the contract, when I started my business 11 years ago I had a lawyer draft a standard contract to use. I have never once had a client willing to treat it as a starting point. I think it is a fair and good agreement, but no one else seems to. I always have to use theirs (many of which are not well drafted).

I find the MSA/PO route to be quite effective. Most companies have a boilerplate MSA and most of those are reasonable. Every now and then someone will ask me to sign one that requires $50 million in liability insurance, signs over the IP rights to all patented and copyright material, or some other stupidity and you just mark through that crap and sign it. If they don't like your strike outs then don't work for them.

David Simpson, PE
MuleShoe Engineering

Law is the common force organized to act as an obstacle of injustice Frédéric Bastiat

 

[PengStruct]

Thanks to each of you for your help. Everyone gets a star! I'm working on the Master Agreement now and realize It was not smart to consider doing this work without the agreement. I also realize now that my insurance may not cover me if I dont have the agreement. I did tell them that I always use contracts when I applied for my policy.

 

[fel3]

PengStruct…

In some states (like California) a contract is required by law for professional services, such as engineering, architecture, surveying, etc.

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"Is it the only lesson of history that mankind is unteachable?"
--Winston S. Churchill

 

[TomDOT]

I always feel good when I strike out/initial bullshit requirements in a boilerplate contract, hand it back and nobody bats an eye.

 

[SteelPE]

Tom, I should have struck out all of the BS contained withing an electronic data transfer agreement an architect submitted to me a week ago. Basically the architect took responsibility for no errors contained withing their drawings and require me to hold them harmless if their errors transferred through to my drawings and there was a lawsuit.

Peng, In regards to the W9. I fill out W9's for all of my clients.... and when I submit an invoice to a new client I always include a W9. This is because you will not get payment w/o a W9. Even when I submit a W9 they still ask for them because they find someway to loose them. I went to the IRS website and obtained a EIN number for free so I don't have to send out my SSN either.

In regards to my contracts.... I only get contractors to sign my contracts about 10-15% of the time. I have architects who don't send anything over except for an email asking be to proceed. I have only been burned once..... but then again, I am working with many of the same people I have worked with for the past 10-15 years.