Arizona Independent Contractor Agreement Template
Updated on August 8, 2026
Arizona gives businesses something most states do not: a statutory way to document an independent contractor relationship and get a rebuttable presumption out of it. Under A.R.S. 23-1601 the parties may sign a declaration of independent business status — a DIBS — and where the declaration is properly executed and the parties actually comply with it, the relationship is presumed to be an independent contractor relationship rather than employment.
That is the whole reason an Arizona-specific contractor agreement exists, and it is exactly what the widely copied free template for this state leaves out. That template mentions no Arizona statute at all, and then fills itself with clauses that point the other way: the contractor works on the client's premises during the principal's regular hours, commits to a minimum number of hours per week, and is given a workspace by the principal — while a separate clause says the contractor supplies all its own tools. It also carries a California letterhead on every page. This version contains the declaration as an annex you can switch on, and removes the clauses that would undercut it.
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Arizona Independent Contractor Agreement
This Agreement is made on between of (the Principal) and of , a (the Contractor). The Contractor holds the following registration or licence for the services it provides: , and will maintain it for the duration of this Agreement.
1. Services and Deliverables
The Contractor will provide the following services: . The deliverables and their due dates are: . The Principal may set acceptance criteria and quality standards, which are: .
2. Independent Contractor Relationship
The Contractor performs the services as an independent business and not as an employee, agent, partner or joint venturer of the Principal. The Contractor determines the methods, sequence, location and schedule by which the services are performed, subject only to the deliverables and deadlines agreed above. The Principal may state what result it requires; it does not direct how the Contractor achieves it.
Where access to a site, premises or system is needed to deliver the services, the Principal will provide it for that purpose: . Such access is granted to enable delivery and does not make the Principal's premises the Contractor's place of work, set the Contractor's working hours, or create any obligation to attend for a minimum number of hours.
This engagement is non-exclusive. The Contractor is free to provide services to other clients, to market its business, and to accept or decline further work from the Principal.
3. Tools, Equipment and Expenses
The Contractor supplies and maintains, at its own cost, the tools, equipment, software and materials it needs to perform the services, and bears the ordinary expenses of performance. The Principal reimburses only expenses it has approved in writing in advance, which are: .
4. Fee and Payment
The Principal will pay the Contractor a fixed price of for the services, invoiced against the deliverables completed.
Invoices are payable within days. Amounts outstanding after that may bear interest at , subject to any maximum permitted by applicable law. The Contractor may suspend work while an invoice is overdue, after giving written notice.
5. Taxes, Benefits and Insurance
The Contractor is responsible for all taxes arising from the fees paid under this Agreement, including income tax and self-employment tax, and for any employment taxes for its own workers. The Principal will not withhold taxes from the fees. The Contractor is not entitled to employee benefits, paid leave, health coverage, retirement contributions or unemployment benefits from the Principal.
The Contractor carries general liability insurance of not less than and, where it engages workers, its own workers' compensation coverage as required by Arizona law, and will provide certificates on written request. The Contractor is not covered by the Principal's health or workers' compensation insurance.
The Contractor may engage its own employees or subcontractors to perform the services at its own expense, and remains responsible for their work, their pay and their taxes. The Principal does not direct, supervise or control the Contractor's workers.
6. Intellectual Property
On payment in full, the Contractor assigns to the Principal all rights in the deliverables created specifically for the Principal under this Agreement. The Contractor retains ownership of its pre-existing materials, tools, methods, libraries and know-how, and grants the Principal a non-exclusive, perpetual licence to use those to the extent they are incorporated in the deliverables.
7. Confidentiality
Each party will keep the other's confidential information confidential, use it only for this engagement, and continue to do so for after the engagement ends. This does not apply to information that is public through no breach of this Agreement, was already known to the receiving party, is independently developed, or must be disclosed by law or court order.
8. Termination
This Agreement runs from until . Either party may end it on written notice, or immediately if the other commits a material breach and does not remedy it within of written notice. On termination the Principal pays for services properly performed and approved expenses incurred to the termination date, and the Contractor delivers the work produced to that point, subject to the intellectual property terms above.
9. General
This Agreement is governed by the laws of the State of Arizona, and the parties submit to the jurisdiction of the state and federal courts located in County, Arizona.
Neither party may assign this Agreement without the other's written consent. It may be signed in counterparts and by electronic signature where permitted by applicable law, may be changed only in writing signed by both parties, and if any provision is unenforceable the rest continues in effect.
Principal
Date:
Contractor
Date:
10. Annex: Declaration of Independent Business Status
This declaration is made under A.R.S. 23-1601 on by in relation to services provided to . Executing a declaration is not mandatory, and a failure to execute one creates no presumption and is not admissible to deny independent contractor status.
The Contractor acknowledges to the Principal that:
- The Contractor operates its own independent business and is providing services to the Principal as an independent contractor.
- The Contractor is not an employee of the Principal, and the services rendered do not establish any right to unemployment benefits or any other right arising from an employment relationship.
- The Contractor is responsible for all tax liability associated with payments received under this contractual relationship, and the Principal will not withhold any taxes from those payments.
- The Contractor is responsible for obtaining and maintaining any required registration, certificate or licence, and for paying all associated fees, needed to perform the services.
The Contractor further acknowledges at least six of the following, and the ones that apply to this engagement are marked:
- The Contractor is not insured under the Principal's health insurance coverage or workers' compensation insurance coverage.
- The Principal does not restrict the Contractor's ability to perform services for or through other parties, and the Contractor is authorised to accept work from and enter into contracts with other parties.
- The Contractor has the right to accept or decline requests for services by or through the Principal.
- The Principal expects that the Contractor provides services for other parties.
- The Contractor is not economically dependent on the services performed for or through the Principal.
- The Principal does not dictate the performance, methods or process the Contractor uses to perform services.
- The Principal has the right to impose quality standards or a deadline for completion of services performed, or both, but the Contractor is authorised to determine the days worked and the time periods of work.
- The Contractor is paid a fixed or contract rate for the work or services performed and is not paid a salary or an hourly wage in the manner of an employee.
- The Contractor is responsible for providing and maintaining all tools and equipment required to perform the services performed.
- The Contractor is responsible for all expenses incurred by the Contractor in performing the services.
These acknowledgements apply equally to the Contractor's own employees and subcontractors engaged to perform the services. Both parties confirm that the working relationship described in this Agreement reflects how the services are actually performed.
Contractor (declarant)
Date of declaration:
Principal
Date of declaration:
What the declaration of independent business status does
The statute is permissive, not mandatory. Executing a declaration is optional, and A.R.S. 23-1601 says that failing to execute one creates no presumption and is not admissible to deny independent contractor status. So there is no penalty for not using it — only an advantage in using it properly.
The declaration works by having the contractor acknowledge a defined set of statements: that they operate their own independent business and provide services as an independent contractor; that they are not an employee of the contracting party and the relationship creates no employment or unemployment rights; that they are responsible for all tax liability and that the contracting party will not withhold taxes; and that they must obtain and maintain any registration or licence their services require.
On top of those, the contractor acknowledges at least six of ten listed factors — no coverage under the contracting party's health or workers' compensation insurance; freedom to work for other parties; the right to accept or decline work; that the contracting party expects them to provide services to others; that they are not economically dependent on this work; that the contracting party does not dictate the methods of performance; that quality standards and deadlines may be set but the contractor controls their own work schedule; that payment is for contracted work rather than a regular salary; that the contractor provides and maintains its own tools and equipment; and that the contractor bears the expenses of performance.
This template presents those factors as a checklist inside the document, so the six or more that are true of your engagement are recorded on the face of it rather than assumed.
A declaration only helps if the contract does not contradict it
The presumption is rebuttable, and what rebuts it is how the parties actually behave — and what the rest of the contract says. Signing a declaration that says the contractor controls their own schedule, in an agreement that separately requires them to work the principal's regular hours and put in a minimum number of hours a week, produces a document that argues against itself.
This template therefore removes the source template's control clauses rather than sitting them next to the declaration. The contractor determines the methods, sequence and schedule of performance. Deadlines and quality standards are set by reference to deliverables, not attendance. The contractor supplies its own tools and equipment and bears its own expenses unless a specific pre-approved expense is agreed in writing. Where the contractor genuinely does need access to a site or system, the agreement says so as access for delivery, not as a workplace provided to a worker.
Note also that the declaration governs the state-law question. Federal classification for tax and wage purposes runs on its own tests, applied by the IRS and the Department of Labor, and an Arizona declaration does not settle those. Nor does it override how a court would look at the true nature of the relationship. Treat the declaration as strong documentary support for an arrangement that is genuinely independent, not as a way to convert an employee into a contractor on paper.
The commercial terms the source template is missing
Beyond classification, the source template omits most of what a services contract needs. There is no intellectual property clause, so nobody owns the deliverables. There is no confidentiality clause. There is no invoicing schedule, payment period or late-payment term. Expenses are accepted without limit or approval — the principal simply agrees to pay whatever the contractor incurs. There is no insurance requirement beyond workers' compensation, no mutual indemnity, no liability cap, and no termination clause other than the services being completed.
It also carries a damages clause that cannot be applied: liquidated damages "and not as a penalty" fixed at twenty per cent of the total sums awarded. A liquidated sum defined as a percentage of an award is circular, and it sits awkwardly next to an arbitration clause that says nothing about costs. This template drops it and uses ordinary remedies instead.
In its place you get assignment of work product with a carve-out for the contractor's pre-existing materials, confidentiality with a defined term, invoicing and payment periods, an expense policy requiring prior written approval, insurance the contractor confirms it carries, a mutual indemnity, termination for convenience on notice and for breach after a cure period, and a choice between Arizona courts and arbitration.
Clause-by-clause guide
- Services and deliverables
- Describes the result to be delivered rather than the hours to be attended. Deliverable-based scope is itself evidence of an independent engagement.
- Control of methods and schedule
- States that the contractor determines how, when and in what order the work is done, subject to agreed deadlines and quality standards. Replaces the source template's premises-and-regular-hours clause.
- Tools, equipment and expenses
- The contractor supplies its own tools and bears its own costs, with reimbursement only for expenses approved in writing in advance.
- Fee, invoicing and late payment
- Fixed price, hourly or milestone-based, with invoicing frequency, payment days and a stated late-payment rate instead of an open-ended monthly retainer.
- Taxes and no benefits
- The contractor is responsible for its own income, self-employment and payroll taxes, and receives no employee benefits, paid leave or unemployment coverage from the principal.
- Insurance and workers' compensation
- The contractor carries its own general liability cover and, where it engages workers, workers' compensation, with certificates available on request.
- Intellectual property
- Assigns the deliverables to the principal on payment, or licenses them, with the contractor's pre-existing materials, tools and know-how carved out.
- Confidentiality
- Protects each side's confidential information for a stated period after the engagement ends, with the usual exceptions for public and independently obtained information.
- Termination
- Either party may end the agreement on notice for convenience, or immediately for material breach after a cure period, with payment for work properly performed.
- Declaration of independent business status
- The Arizona annex. Carries the statutory acknowledgements and the factor checklist, signed by both parties, so the presumption under A.R.S. 23-1601 is documented rather than assumed.
Arizona compliance checklist
Arizona-specific points first, then the federal tests the declaration does not reach.
Execute the declaration correctly if you want the presumption
A declaration of independent business status must carry the statutory acknowledgements — independent business, no employment rights, contractor bears tax liability, contractor holds required licences — plus at least six of the ten listed factors. Where the declaration is properly executed and the parties comply with it, a rebuttable presumption of an independent contractor relationship arises.
A.R.S. 23-1601 - declaration of independent business statusRemember that not executing one costs you nothing
Compliance with the chapter and execution of a declaration are not mandatory, and failure to execute a declaration creates no presumption and is not admissible to deny independent contractor status. Use it because it helps, not because you must.
Make sure the rest of the contract matches the declaration
The presumption is rebuttable. Clauses requiring attendance at the principal's premises during the principal's hours, a minimum weekly hours commitment, or a workspace provided by the principal all pull against the factors the declaration recites. Remove them or do not sign the declaration.
Apply the federal tests separately
Worker classification for federal tax purposes and for federal wage and hour purposes is decided under federal tests by the IRS and the Department of Labor. An Arizona declaration is state-law evidence and does not determine the federal answer.
Check licensing before the work starts
Contracting work in Arizona may require a licence from the Registrar of Contractors, and many other occupations are separately licensed. The declaration itself has the contractor acknowledge that it holds the registrations and licences its services require.
Handle workers' compensation deliberately
An independent contractor is generally not covered by the principal's workers' compensation policy, and one of the ten statutory factors says exactly that. Where the contractor engages its own workers, it should carry its own cover and be able to show a certificate.
Avoid unenforceable liquidated-damages wording
A liquidated sum expressed as a percentage of whatever is awarded is circular and invites challenge as a penalty. Use ordinary damages, or a genuine pre-estimate of loss tied to an identified breach.
How to complete this Arizona contractor agreement
- Describe the deliverables. Set out the services and outputs, and the dates or milestones they are due, rather than the hours the contractor will attend.
- Set the fee and payment terms. Choose a fixed price, hourly rate or milestone schedule, then enter invoicing frequency, payment days and the late-payment rate.
- Set the IP and confidentiality position. Choose assignment or licence of the deliverables, and set how long confidentiality runs after the engagement ends.
- Complete the declaration annex. Switch the declaration on, then tick at least six of the ten statutory factors that are actually true of this engagement.
- Check for contradictions, then sign. Read the finished document against the factors you ticked, remove anything that contradicts them, then download the DOCX or PDF and have both parties sign.
Frequently asked questions
What is a declaration of independent business status in Arizona?
It is a written declaration under A.R.S. 23-1601 in which the contractor acknowledges a set of statutory statements about operating an independent business, plus at least six of ten listed factors. Where it is properly executed and the parties comply with it, a rebuttable presumption of an independent contractor relationship arises.
Is the declaration mandatory in Arizona?
No. The statute says compliance and execution of a declaration are not mandatory, and that failing to execute one creates no presumption and is not admissible to deny independent contractor status. It is an optional advantage, so there is no downside to using it where the relationship genuinely is independent.
Does a signed declaration make someone an independent contractor?
No. It creates a presumption that can be rebutted by the facts. If the working relationship looks like employment — set hours at the principal's premises, the principal's tools, the principal's direction over methods, economic dependence — the declaration does not change that, and a contract that contradicts its own declaration makes the position worse rather than better.
Does the declaration cover federal taxes or federal wage law?
No. Classification for federal tax purposes and under federal wage and hour law is decided by federal tests applied by the IRS and the Department of Labor. The Arizona declaration is state-law evidence about the relationship; it does not answer the federal question, and you should assess that separately.
How many of the ten factors do we need?
At least six, and they should be ones that are genuinely true of the engagement. The template lists all ten as a checklist inside the document so the ones you rely on are recorded, rather than the parties assuming afterwards which applied.
Can the contractor work at our offices?
They can attend to deliver the work, and the template supports site or system access for that purpose. What it avoids is the source template's framing — required attendance during the principal's regular working hours, a minimum weekly hours commitment, and a workspace provided by the principal — because that reads as employment and cuts against the factors in the declaration.
Who owns what the contractor produces?
Whoever the contract says. This template assigns the deliverables to the principal on payment, or licenses them if you prefer, and carves out the contractor's pre-existing materials, tools and know-how. The source template has no intellectual property clause at all, which leaves ownership with the contractor by default.
Should disputes go to court or arbitration?
Either, and the template lets you choose rather than defaulting to an institutional arbitration clause with no seat and no cost rule. If you choose arbitration, set the rules and the allocation of costs; if you choose courts, the agreement points to the Arizona courts for the county you name.
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Disclaimer
This template and guide are for general information only and are not legal, tax or employment advice, and no attorney has reviewed them. Worker classification depends on the facts of the relationship and on federal tests this document does not decide — take advice before relying on it.
