Written By: Tom Ogg
One of the things necessary to be an independent contractor working through a host travel agency is a valid contract. In the absence of a contract the IRS is sure to determine that you have been misclassified as an I.C. and should have been treated as an employee. Your host contract will spell out the details of your business relationship and will serve as the entire agreement between you and the host. For this reason it is important to explore the various elements of your host agency contract.
Parties to the Agreement:
Be sure that the host agreement is executed between the correct parties. If your business structure is as an LLC, LLP, Partnership, Subchapter S Corp or full corporation, be sure the agreement is signed appropriately.
Term of Agreement:
All host agency agreements should be for a specific length of time. They may renew automatically, but should be physically renewed when it expires.
Duties of the Parties to the Agreement:
This will lay out the various obligations created by the Agreement. You should carefully read this portion of the Agreement to make sure that it expresses what your understanding is of the relationship being solidified by the Agreement.
Independent Contractor Statement:
Your Agreement should have a clause that clearly identifies your relationship as one of an independent contractor and principle.
There should also be a section that deals with federal income tax reporting and how it is going to be recognized and reported by the host agency. 1099s are the correct way to report income for an independent contractor.
Commission and Fee Payments:
All commission amounts and fees should be clearly stated in the Agreement. Be sure to check that they are exactly as you thought they should be. Question any fees that were not disclosed during the conversation leading up to the Agreement.
Ownership of Accounts:
The Agreement should clearly state who owns the clients that you serve. Some host agencies that provide leads retain ownership of the clients while others do not. If you are bringing you clients to a host and want to retain ownership of the clients, this should be clearly stated in the Agreement.
Payment for Services:
The Agreement should spell out who pays for what services. If you are going to be charged for services provided by the host agency they should be clearly be defined.
Travel Benefits should also be clearly described in the Agreement as well as how the I.C. should proceed in a request for them.
There will also be several clauses that deal with indemnification, choice of legal venue, compliance with local, state and federal laws and so on. But, the above clauses in the Agreement are the most important to consider and understand.