Paying Nonresident Independent Contractors
Use the steps below to engage and pay your Nonresident Independent Contractor. You can also read about other processes for nonresident contractors, such as completing the required Travel Expense Report.
Engaging a Nonresident Independent Contractor
1. Department sends forms to individual.
The department representative sends the nonresident contractor a copy of the Payment Packet for Nonresident Independent Contractors or the Prize/Award Payment Packet.
2. Department reviews grant requirements.
If a sponsored project is to be charged for the contracted service fees, the prospective user of the independent contractor or consultant must be certain that any requirements applicable to the grant or award have been met prior to entering into a contracted services agreement.
3. Contractor completes forms.
The contractor completes all relevant forms in the Packet and any necessary immigration forms. The contractor brings all required documents to Northwestern on the first date services are to be performed.
Paying a Nonresident Independent Contractor
1. Agreement and invoice.
Upon arrival on campus, the nonresident independent contractor presents the Northwestern University Contracted Services Agreement for Nonresidents and the contractor's invoice to the representative who engaged the contractor. Prior to arriving on campus the contractor should complete the form, including the rate or expected fee. Reimbursement for Travel Expenses may be submitted to the Payroll Office on a separate Contracted Service Agreement for Nonresidents when all travel is completed.
2. Department representative approval.
The department representative should review for accuracy:
- Rate of pay or flat fee
- Receipts for reimbursement
3. Accounting information.
The department representative should complete the accounting information, including:
- 6 digit department code
- 6 digit Location Code
- Amounts to be charged
- Total services expense and total travel expense
4. Scheduling the check.
The check for a nonresident’s payment can be available on the day of the contractor’s completing the work if the check is arranged sufficiently in advance of the completion date. The payment process for a nonresident takes about 5 business days.
The department representative should check the Payroll Schedule, identify when the check will be issued, and enter that date in the box "Request check by" on the Contracted Service Agreement for Nonresidents.
The check will not be released from the payroll division until services are completed. The paycheck issue date cannot be earlier than the contracted service completion date. If at any time the department feels that the contractor will not complete the services by the check issue date, the department must contact the Payroll Office immediately and cancel the payment.
5. Obtain Signatures
Signature of contractor. The contractor or consultant must sign and date the Contracted Services Agreement for Nonresidents to signify performance of the contracted services and the date services will be completed.
Signature of department representative. The department representative signs the agreement attesting that the work will be completed by paycheck issue date and that the contractor is to be paid according to the policy and the agreement. The representative ensures that account is valid and the proper objects of expenses are open.
Approvals. Approvals for sponsored project contractors or consultants require signatures of the principal investigator and the director of office of research and sponsored programs (ORSP), as the authorized institutional representative.
For non-sponsored project contractors or consultants, the University controller or authorizing agent must sign and date the contracted services agreement for non- residents as the authorized institutional representative.
When the Contracted Service Agreement is received in the payroll department directly from the nonresident independent contractor, the payroll office will obtain the signatures from the director of the office of research and sponsored programs (ORSP) or the University controller.
Notice of approval to the department. The office of research and sponsored programs (ORSP) or the University controller will review and sign the Contracted Services Agreement for Nonresidents before the check issue date. The department representative will be contacted if the director of the office of research or sponsored programs or the controller needs additional information.
Other processes for Nonresident Independent Contractors
Reviewing the travel and expense form
Travel and expense form. The nonresident independent contractor will be required to complete the Travel Expense Report if reimbursements were part of the original agreement between the department representative and the non-resident independent contractor. Travel expenses for nonresidents are considered taxable income unless receipts are presented.
Department approval. The department representative should review and sign the Travel Expense Report and verify that all receipts are presented and that the box "Receipts Received" is checked YES on the Contracted Services Agreement Form for Non-Residents.
Meeting with Payroll representative
If the department knows the arrival date of the individual, the department representative should schedule an appointment for the individual with the Payroll Office so that the nonresident independent contractor can present all payment and immigration forms when he or she arrives. This meeting should take place before the person begins his assignment to assure authorization to fulfill their contractual services.
The department should call AskHR at 1-4700 to set an appointment for the visitor.
Taxation
For a comprehensive list of all types of payments made to nonresidents and for the taxation rules, see the Taxation Matrix for Nonresidents in the Payment Packet for Nonresidents. Also included on the matrix are forms required for payments, treaty eligibility, funding information and special instruction.