C. Consultants

A consultant is deemed to be an independent contractor by the IRS. Thus, it is important to operate legally as an independent regardless of the kind of sales promotion, marketing, engineering, or other professional services you may provide. The first step is to utilize a written agreement whenever you contract to provide services. Among other items, always confirm:

• a description of the services to be rendered
• the amount of time to be provided for such services (e.g., "no more or less than X hours per week")
• the method of compensation, whether a per diem rate, hourly rate or fixed price for the entire job. If you are to receive a flat fee, negotiate to be paid in installments with as much up-front payment as possible and never at the end of the job.
• a commission, royalty, or incentive (such as a cost reduction or savings) from your efforts
• reimbursement for travel and incidental expenses
• manner of invoice and payment
• term of the agreement
• provisions for resolving disputes, such as binding arbitration

(Note: Information about arbitration, mediation, other forms of litigation and working with a lawyer effectively are discussed in Chapters Nine and Ten.)