4 Types of Contracts Every Small Business Should Use
When it comes to the survival of your small business, contracts play a crucial role. The days of relying on oral agreements are over when it comes to a court of law. Without the enforceability of a written promise, you can lose out on a large chunk of change. Let’s take a look at the four most important contracts that your small business should be using.
Independent Contractor Agreements
When your company seeks outside help from a self-employed specialist, you need to use an independent contractor agreement. This agreement outlines what both parties expect from the service being provided and what will happen if the service is not performed to the standards outlined in the contract.
While some business owners rely on the verbal contract of employment, it doesn’t hurt to put it in writing. These legal documents can define the scope and conditions of an employee’s position. In addition, the pay rate, benefits, vacation time, and ceasing employment procedures can all be outlined so both parties are apprised of how these situations will work.
Many small businesses start by forming a partnership. This is usually a very good idea, but it can be problematic if both partners are focused on business expansion on not on contingencies if something goes wrong, like the partnership failing. Never leave these situations up to chance. It doesn’t matter why the partnership fails – whether it’s due to differing ideas of how to run the business or because one partner is more committed than the other – it’s important to have an exit strategy from the partnership. This is the partnership agreement. If you don’t have one, you might end up having to buy out your partner while taking on all the work to keep the business going.
This is one of the lesser known and less utilized contracts out there. Small business owners should understand what this type of contract is for and why they should use it regularly. Every business owner knows their business needs to be on the cutting-edge and adapting with the culture of its patrons or they will go out of business. Your project ideas and strategies that are developed by you and other employees are important to your business’s success. Confidentiality agreements help to protect the rights of these ideas and strategies. In addition, these should be used regularly to protect the leak of sensitive client information.
Each of these contracts has a use in the business world, and small business owners should use them all regularly. Talk to a lawyer specializing in business law to get contracts fit for your business. Make protecting your business assets, employees, and information a priority. By getting agreements in writing, you’ll never have to worry about fallouts.