We’ve said it before, and we’ll keep on saying it until the end of time: you need a contract for your business.
Once you know you’re in it for the long haul, you need to protect your time, money, and resources as a biz owner. A contract can do that. It can also inspire trust in the clients you work with, not to mention lay the foundation for a happy, healthy professional relationship.
So you need a contract. But what should your contract include? Don’t forget these seven things in your contract that can easily be overlooked!
When making your business legally legit, you probably had to decide whether to form an LLC or to register your business as a DBA. An LLC, or limited liability company, helps build trust and credibility with your customers — and it protects you in case of a lawsuit. A DBA, or “doing business as,” is the assumed name of your biz, which can be different from yours.
Why are we recapping all this information? Because when you’re signing contracts with clients or other parties, it’s incredibly important to include the correct names of both parties! Check that you’re using your business name and the business name of the other party involved.
If you thought “use the correct name” couldn’t get any simpler when it comes to our advice…well, here we are with the date.
Please don’t forget to date your contracts! Always include some form of “valid fromxtoy” clause explaining when your contract applies. You can also talk about how you and your clients will reevaluate your contract after that time period ends if you’d like to continue working together.
Wanna make sure that you’re not doing work above your pay grade? Hate when projects with clients have vague guidelines and loose (if not nonexistent) deadlines?
To avoid this dreaded scope creep, you gotta make sure your contract includes a complete, correct description of services. A description of services clearly outlines details like:
Set expectations and boundaries with your clients from the start by including a description of services in your contract. It’ll bail you out if there’s ever a disagreement over what you’re responsible for, too.
Are you a creative professional or service-based biz owner who requires deposits up front? Think wedding photographers, event planners, or graphic designers. Then you have to write non-refundable deposits into your contract to protect your time and work. This helps you get paid and can help you make more money.
Operate on a retainer? Then your contract should explain what you charge on retainer and when — $2,000 a month, billed on the first of the month, for your services as an online business manager, for example.
Whether you rely on non-refundable deposits, retainers, or both, it’s crucial that you write your pay schedule clearly into your contract. Outline how you get paid, how much, and when.
Yes, we’re including two sections that cover important payment terms because you deserve to get paid for your work, friend. And that means laying down the law in your contract for what happens when you are paid late, or not paid at all.
Don’t be afraid to make these penalties obvious in your contract! Clearly state what late fees your charge for late payments, which may be a flat fee or a percentage. Don’t forget to explain what “late” means to you, too.
What if payment stops entirely? Your contract should explain that your services and work will cease until you are paid — plus interest or reinstatement of service fees, if you like.
And if your client ghosts you and doesn’t pay you at all, your contract should state what happens in case of collections or lawsuits. Sounds harsh and we hope you don’t have to enforce these rules, but it’s a good idea to have them spelled out just in case.
Many of us service-based biz owners work from home, which makes it easier to work with multiple clients on a flexible schedule of our choosing. But sometimes, it does not make it easier to get the information you need from your clients.
That’s why a section about access to information in your contract can come in handy. When you aren’t sitting across the room in a physical office with your client, you need to be able to access branding, images, copywriting, information about products or services, assets — you get the idea.
You also don’t want to waste time sending emails and Slack messages requesting access to what you need. Save yourself the time and headache with a clause on access to information. Virtual assistants and social media managers, this applies to you especially!
What if the unexpected happens — hello, pandemic — and your client has to cancel? What if someone demands a refund and threatens to take you to court?
A limitation of liability clause helps establish liability, or responsibility, ahead of time. It removes emotion from the equation and explains what will happen in plain terms. It will also limit how much damages, or money, that someone can demand from you if they sue.
Without these crucial clauses and bits of information, trouble can easily arise. A solid contract with all of these details included will not only protect you legally. It can also help your work relationships run more smoothly, thanks to firm boundaries and clear expectations.
Head is spinning with all this contract talk? Worried that you’re leaving yourself legally vulnerable without a contract? All of our contract templates in our shop include these important clauses and info, plus much more.
Whether you’re a coach, a copywriter, or an influencer, our contract templates cover all the bases, giving you peace of mind and confidence in your biz. Find a contract template that’s perfect for your business today!
Kevin Gallagher is the CEO of The Contract Shop®, a contract template store for creative entrepreneurs, freelancers, coaches, and more. His background is in helping online businesses grow, having previously worked at Allbirds managing part of their operations. He is proud to report that his digital artist wife Mandy is a happy customer of The Contract Shop®, and his main motivation is to help as many people like her as possible with the tools that they need to confidently manage their businesses.
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