Financial Affairs

PROFESSIONAL SERVICE PAYMENTS

The procedures for preparing to pay a service provider classified as an independent contractor are included below.  If the service provider will be paid an honorarium, consult the Honorarium Payments page.

Background
Professional service providers are contractors, consultants, or organizations that provide infrequent, unique functions specific to DePaul University’s needs and for which payment is legally or traditionally expected. 

Payments for professional services should be initiated through the Accounts Payable Department, unless the service provider is also an employee of the university.  If the service provider is an employee of the university, the payment to the employee should be processed according to the appropriate Human Resources policies and procedures for one-time payments.

Procedures

BEFORE THE SERVICE:

Complete any necessary purchase requisitions
If the service is expected to cost more than $2,500, follow the purchasing policies and procedures found on the Procurement Services Webpage and included in the Purchasing Requirements Policy to obtain a Purchase Order. Planned services costing $2,500 or less do not require a purchase order.

Determine Professional Service Provider Classification
Regardless of expected cost, consult the Employee/Independent Contractor Questionnaire, and the Use of Independent Contractors and Consultants Policy to determine the appropriate employment classification of a service provider, which dictates whether a service provider is paid as an independent contractor or as an employee of the university.  If the service provider is paid as an employee, then the University is responsible for withholding taxes and paying the employer portions of FICA and Medicare. On the other hand, if the service provider is classified as an independent contractor then the service provider is responsible for all tax obligations. See the IRS 20 Factor Test on Employment Status to ensure compliance with the IRS guidelines.  Misclassification can result in penalties and interest as well as additional FICA taxes on amounts paid to independent contractors reclassified as employees by the IRS.  For payments to service providers classified as employees, contact Human Resources for appropriate procedures.

Complete the Professional Service Agreement
Complete the Professional Services Agreement from the Office of the General Counsel for any professional services provided to the university by a provider classified as an independent contractor.

AFTER THE SERVICE:

Submit the completed agreement, along with appropriate supporting documentation to substantiate that the service was provided, to the Accounts Payable department.  

For services totaling $2,500 or less, instruct the service provider to send an invoice, along with a copy of the signed contract, to the Accounts Payable Department

For services totaling more than $2,500, instruct the service provider to send the invoice to the Accounts Payable Department with the purchase order number referenced on the invoice. 

Accounts Payable will process the invoice according to the procedures on the Requesting Payment of Invoices page.

In all cases, professional service providers providing services to DePaul must submit an invoice for payment.  The submitted invoice should always include the dates of service and detailed descriptions of the work performed.