PLEASE READ AND SIGN - IRS 20 Points

Off of the IRS website. The IRS uses 20 common law factors on a case by case basis to determine whether a
worker is an independent contractor. Not all factors must apply or bear the same weight. Many are more oriented
toward construction contractors rather than professional service providers.

A Consultant:

1. Receives No Instructions Contractors cannot be required to follow specific instructions to accomplish a

job. However, you can provide job specifications and/or guidelines. Be careful no to require a procedure.

2. Receives No Training Contractors cannot be trained by the hiring firm. They must use their own means
to accomplish the work. You can provide an orientation to your environment or product, but not
functional training.

3. Performs Work that is not Fundamental to the Success or Continuation of the Business Contractor
services should not be an integrated part of the business operations of the employer on an ongoing,
regular basis.

4. Is Not Required to Perform Services Personally Contractors are hired to provide a result. If they can
use others to do the actual work, this demonstrates the employer’s lack of control over the means of
achieving the result.

5. Hires and Controls His/Her Own Assistants and Subcontractors Contractors should hire, supervise,
and pay assistants and subcontractors at their sole discretion, not at the direction of the hiring company.

6. Has no Continuing Relationship Usually contractors do not have a continuing relationship with a hiring
company. You may want to reconsider your approach for any project significantly longer than a year.

7. Establishes an Independent Work Schedule Contractors set their own work hours. You should not
dictate specific hours schedules, or require detailed time sheets or it could be viewed as exercising too
much employer control over the consultant.

8. Pursues Other Work Contractors should be permitted to work when and for whom they choose. You
must not preclude them from pursuing the development of their business while on your assignment
(although the nature and scope of the job may, in fact, occupy all their time).

9. Controls Their Job Location Contractors should control where they work. You should not require that
the consultant work on site, unless there are confidentiality or date access issues. You may want to
encourage the consultant to work form his/her office as much as possible.

10. Establishes Order of Work Contractors should not receive instructions concerning work order and
sequence. Since they are responsible for the result, they determine the activities needed to complete it.

11. Provides No Interim Reports Contractors should not be required to submit progress or interim reports.
Contractors may volunteer status information. Alternatively, projects can be split into more discrete
phases, payment for which is dependent on satisfactory completion.

12. Receives Payment by Job Contractors are typically paid by the job, not on an hourly, weekly of monthly
basis.

13. Pays Business Expenses Contractors are generally responsible for their own business expenses. This
does not preclude billing clients for out of pocket expenses for a project. However, direct business
development and overhead expenses should not be recouped.
Name of sub-contractor

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Date
 14. Supplies Tools and Materials Usually contractors furnish their own tools and materials, and do not use
those furnished by the hiring company. (This is seldom an issue for professional services consultants.)

15. Makes a Significant Investment in Their Business Contractors should have an adequate investment in
their business and not use the hiring company’s facilities. For example, they should have their own
office, rather than a regular office at you company. **

16. Realizes Profit or Loss A contractor normally takes real economic risk that the project will not result in
a profit, by assuming responsibility for subcontractor payments, office overhead and the like.

17. Works for Multiple Firms Contractors often work for a multiple of unrelated persons or firms at the
same time, and should not be restricted by the hiring company from doing so. You should not require an
exclusive relationship.

18. Makes Services Available to the General Public Contractors make their services generally available.
For example, they have an office, a business license; they advertise their services and make themselves
available through interim management networks, like the M Squared network.

19. Works until Job Completion Contractors cannot be fired so long as they do not breach the contract.
Non-performance results in a breach of contract.

20. Receives Compensation for Completion of Work Contractors are responsible for the satisfactory
completion of a job or they may be legally obligated to compensate the hiring firm for failure to
complete.

NOTE: The courts have not assigned weights to these factors, but those most often cited concern control of
the methods used to accomplish the work, i.e.: 1-5, 7, 9, 10, and 11. Other factors which appear crucial are
whether the consultant offers services to the general public or supplies his/her own tools and work place. If
you find one key factor or three of the other factors do not apply to this consulting engagement, you may be
better treated as an employee rather than an independent contractor.

*The characterization of a consultant as an independent contractor when it is deemed an employee by government

authorities can have severe implications for the employer, including financial responsibility for past withholding
of state and federal taxes, unemployment benefits, workers compensation benefits, health benefits and social
security benefits, and penalties of up to 100% of amounts due.

Our companies insists that contractors be incorporated.

Please send applicable proof of insurance.

AGREEMENT

With this signature, I am declaring that I am consulting via an incorporated business and that my company is
operating in accordance with US law.

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Signature Date

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Print Name
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Company Name EIN