Common Legal Contracts: Your Small Business Needs
Having legal contracts in place for your small business will not only provide proper legal protection but help you develop and manage better relationships with your employees and third parties you do business with. Here are a few common legal contracts for small businesses that every entrepreneur should have in place:
If you’re going into business with another person, it’s essential to establish a contract to avoid potential disputes from happening. A partnership agreement should include each partner’s roles and responsibilities, as well as the resources they’re bringing into the business. For example, will each partner work full-time, or will the duties be divvied up differently?
This agreement should also specify how profits will be distributed, how decisions will be made and what the plans are for succession. Will each partner receive a salary, or just profits depending on their role? If one partner retires, wants to sell their part of the company or passes away, what will happen to the business? You may also want to include a non-compete clause in case one partner decides to leave the existing business and go into business for themselves.
If you’re sharing your company’s proprietary information with a third party, it’s a good idea to ask them to sign an NDA, or non-disclosure agreement. For instance, if you share your company’s financial information, pitch deck or marketing materials with a vendor, supplier or independent contractor, you’ll want them to sign an NDA to make sure that information is protected.
Independent Contractor Agreement
If you’re a small business, chances are you may outsource some work to freelancers or independent contractors. Maybe you have a creative freelancer who helps write copy for your website, a coder who built it from scratch or marketers who run your social media accounts.
An independent contractor agreement can include rates, terms, project scope, deliverables, estimated turnaround times and more. If you choose, it can also include liability and non-compete clauses.
Many independent contractors may have their own agreements, so ask to see it if you’d like to use theirs. In any case, you’ll want to have a discussion to make sure both parties are on the same page before you begin working together.
This is an umbrella term for agreements that outline deals you make with vendors and suppliers. A business agreement should detail conditions for your partnership, including the goods and services provided and payment terms. It also includes what will happen if either party doesn’t uphold their end of the bargain.
A service contract details exactly what you offer as a business — whether it’s software, professional services, or goods that you sell to your customers. It details the services to be performed, conditions and terms of the service, and limitations on your liability.
Service contracts can also outline the payment terms and what happens when those terms aren’t met. If you choose, it also can detail what you don’t offer as a small business, which can come in handy so your clients know exactly what they can expect from your company.
When you’re hiring someone for your company, you’ll need an agreement that includes the job title, job description, employee responsibilities and job duties. It should also outline their compensation and benefits, as well as include an NDA and at-will clause if applicable. Your employee should review and sign the agreement before their start date.
If you have any questions about what legal contracts you should draw up for your small business and what they should include, visit the Incfile Contract Library. Here, you’ll find 25 lawyer-approved legal documents for contracts such as Operating Agreements, non-disclosure agreements, terms of service, employment agreements, employment offer letters and liability releases, among many others. Access to the Contract Library is included with our Platinum package, and is available as an add-on for our Gold and Silver clients.