Independent contractor or employee?
As an independent contractor, you aren't on the client's payroll. You get no paycheck — you send an invoice, and the client pays it. No tax is withheld, and at year-end a business client that paid you $2,000 or more for 2026 sends you Form 1099-NEC, not a W-2.
That makes the invoice your main record. It shows what you billed, for which period and under which agreement — and it's what the client's accounts payable team needs before they can pay you.
What to include
- Your legal name (or business name) exactly as on your W-9, so the payment matches the 1099
- The client's legal business name and billing address — ask accounts payable which to use
- The billing period ("Oct 1–15") and the contract or statement of work you're billing under
- Hours or days and your rate, or a flat project fee
- A PO number, if the client gave you one — many companies can't pay an invoice without it
- Approved expenses, if your contract lets you bill them, as separate lines
- How you want to be paid — ACH details or a payment link
Example independent contractor invoice
| Line item | Qty | Rate | Amount |
|---|---|---|---|
| Contract services, Oct 1–15 – per agreement dated Sept 2 | 42 | $75.00 | $3,150.00 |
| Contract services, Oct 16–31 | 38.5 | $75.00 | $2,887.50 |
| Approved travel – client site visit, miles at contract rate | 120 | $0.70 | $84.00 |
| Total | $6,121.50 |
Before your first invoice: the W-9
Most companies ask new contractors for Form W-9, which gives them your taxpayer number for the 1099. Send it before your first invoice, ideally with your business address and the name you want on your payments. Use a secure upload or the client's vendor portal rather than plain email — the form includes your Social Security number or EIN. Many contractors get a free EIN from the IRS so they can give clients that instead of their SSN.
Set aside tax from every payment
This is the part that catches new contractors out. On every payment you owe:
- Self-employment tax — 15.3% on 92.35% of your profit, about 14.1%
- Federal income tax at your normal rate
- State income tax, in most states
Because nothing is withheld, the IRS expects quarterly estimated payments. Make the invoice above, then click Find your exact rate to see your set-aside percentage, or use the quarterly tax calculator to work out each payment.
Frequently asked questions
Do I have to report income if I don't get a 1099?
Yes. All self-employment income is taxable, whether or not a 1099 is issued. Clients only have to send a 1099-NEC above the threshold — $2,000 for 2026 — and only business clients send them at all.
Should I charge my client sales tax?
Most professional services aren't subject to sales tax, but some states tax certain services. Check your state's rules for the work you do.
Can I bill expenses on top of my rate?
Only if your contract allows it. If it does, list each expense on its own line and keep the receipts. If your contract has a flat fee, expenses usually come out of your own pocket — but you can deduct them as business expenses.
Should I use my SSN or an EIN?
Either works for a sole proprietor. An EIN is free from the IRS and lets you avoid sharing your Social Security number with every client.