In this week's Freedom Friday blog and email newsletter, I want talk about another topic that should come up more often, especially with new small business owners, and that's what kind of contracts are essential for a small business. Many small business owners get their small business off to a good start with an LLC entity formation, but then they stop right there. In today's Freedom Friday blog and email newsletter, I'm answering the question, “What kind of contracts are essential for my small business?”
In general, there are three different types of contracts that your small business may need when you're getting started. Depending on whether or not you have any employees or workers, you may need employment or independent contractor agreements. You might also need service agreements with any vendors. However, the most important contract that is essential for your small business, especially if you're in business by yourself, and offering services such as consulting, programming, training, or any other kind of freelance service, you need to have solid client contracts which you can modify from project to project, and from client to client. Generally speaking, there are two approaches or options in getting these kinds of contracts in place. You can go online and find a template and take that risk, or you can hire a business attorney to draft the contract for your small business.
Here are the four essential elements to any client contract:
Title and Preliminaries
The first essential element to any client contract is the title and preliminaries. The contract should have a name, for instance a Consulting Agreement. The contract also should provide the names and addresses of the parties and state the legal names of the parties, and addresses.
Scope of Work
The second essential element to any client contract is the scope of work. This is possibly the most important part of the contract. The scope of work section should describe the work to be performed in as much detail as possible, and this section should provide any important deadlines or due dates for the project.
Payment and Terms
The third essential element to any client contract is the payment and terms. Other than the scope of work, this is also one of the most important parts of the contract. Here this section will list how much you will get paid, when you will get paid, and how you will be paid (i.e., what methods of payment are allowed by the contract).
Term of Contract and Termination
The fourth essential element to any client contract is the term of the contract and termination provisions. These provisions will explain when the contract begins, and when the contract ends. Your contract also needs a termination provision, to provide how the contract can be terminated, for example in the event of a default by your client.
Thinking about starting a small business? Or maybe your small business is having issues with contracts, leases, business partners, collection issues, or experiencing other barriers to growth? Please contact me at [email protected] to schedule a FREE strategy session.
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