A business owner needs an Independent Contractor Agreement for several reasons.
Setting Expectations: An Independent Contractor Agreement explicitly sets out the expectations and parameters of the work to be done, the compensation, and the nature of the relationship itself. It is a clear-cut explanation of the expected workflow, how communication will be handled, and how the relationship will work.
Work Product Ownership: An Independent Contractor Agreement protects your business interests by:
Establishing ownership of any work product generated as a result of the arrangement.
Requiring contractors to actively protect trade secrets.
Providing for confidentiality and non-disclosure of key business information.
Affirming the Independent Contractor-Client Relationship: Employers are required to do certain things for employees that they are not required to do for independent contractors, so it's important to affirm the relationship in writing. For example, independent contractors are responsible for paying all of their own income taxes, while employers are required to deduct part of the employees' taxes from their paychecks. Employers usually provide some benefits to employees, such as health insurance and paid time off. These benefits are not offered to independent contractors.
Having a contract alone may not necessarily protect you from a contractor later claiming they were an employee, but it may be a good thing to do nonetheless because it indicates the intention to have an independent contractor-client arrangement at the outset of the relationship. You might seek further protection by having an attorney review your Independent Contractor Agreement or seeking answers to questions you might have.