Updated on February 22nd, 2023
A personal service contract is a document wherein an independent contractor agrees to provide services for their client. The contract allows the parties to establish the terms of the contractor-client relationship, such as the services to be provided, payment information, and the duration of the agreement. The contract ensures clear communication and creates a solid foundation for the working relationship.
What is a Personal Service?
A personal service involves a professional using their skills and knowledge to perform work for a client, as opposed to them delivering a product. According to the IRS, activities in the following fields are considered personal services:
- Actuarial science
- Health and veterinary services
- Performing arts
Why Use a Personal Service Contract
Personal service contracts provide a complete breakdown of a working relationship and ensure both sides understand their roles before it begins.
Personal service contracts address every detail of the relationship to avoid misunderstandings and miscommunications. The parties can review the terms before entering into the agreement and ensure that the arrangement meets their needs and expectations.
Independent Contractor Status
Under the contract’s provisions, the service provider is established as an independent contractor, which means they have greater control over how they carry out their work. It also clarifies that the parties aren’t entering into an employee-employer relationship. Independent contractors can choose their working schedule, hire subcontractors, and are required to handle their taxes and payment deductions.
As a legally binding document, if either party fails to perform duties or uphold the agreement terms, the document can hold the violating party liable and initiate legal proceedings. For example, if the client does not pay the service provider according to the contract terms, the service provider may use the contract to seek legal recourse.