How to Write a Consulting Contract: 6 Best Practices

Contract writing is an important part of your maintaining and growing your business as an independent professional. A contract defines the work you agree to do for a client and also provides you with legal protection.  

Here are six best practices to write a consulting contract that defines your project scope and protects both you and your business. 

How do I create a contract for my consulting business?

Define Duties, Deliverables, and Roles

Your contract should spell out exactly what you’re delivering. Don’t leave room for assumptions: If anything seems vague about timelines, deliverables, or terms, speak up and get clarity before you move forward.

Make sure the contract confirms your status as an independent contractor who handles their own taxes. This is important because as a contractor, you get to control how you do your work and when you do it.

Don’t forget to include what the client needs to provide on their end—whether that’s background materials, being available for meetings, or giving you timely feedback on your work.

Learn More: Negotiating Contracts as a Small Business Owner  

 Prepare for Potential Risk 

A solid indemnification clause helps you manage risk effectively. Try to negotiate mutual indemnification—where both sides agree to cover each other if something goes wrong.

Here’s how it works: You’d cover the client if they get sued because of your mistake, and they’d do the same if their actions create problems for you. It’s a fair way to share responsibility instead of one party taking on all the risk.

Discover: How to Write an Independent Contractor Agreement  

Specify Project Milestones and Engagement Time 

Setting clear delivery milestones keeps everyone on the same page and gives you natural checkpoints to review how things are going before you dive deeper into the work.

Be sure to nail down how long your engagement will last, whether it’s tied to a specific project or runs for a set period. And include a mutual termination clause that lets either party end the agreement if things aren’t working out. It protects both sides and prevents anyone from being stuck in a difficult situation.

Ask Yourself: Do I Need an Independent Contractor Agreement for Consulting?  

Identify Expenses and Outline Payment Terms 

Talk about potential expenses upfront so nobody gets surprised later. If you think there might be additional costs down the road, bring them up early and get them written into your contract.

Always be crystal clear about your payment terms—how you’ll invoice, how you bill, and how you track time. Set expectations for when invoices should be submitted and when you expect to get paid.

One thing to watch out for: early payment discount clauses. These might sound nice, but they can quietly chip away at your rates. It’s usually best to negotiate them out entirely.

Explore: How to Bill and Invoice Clients  

Specify Product Ownership 

Understanding your intellectual property rights is crucial when you’re working as an independent contractor. Be careful about non-compete clauses—they can seriously limit your ability to take on other work. If a client insists on a non-compete, make sure they understand how it could affect your income until the contract ends.

Consider suggesting alternatives like non-disclosure or non-solicitation clauses instead. These protect the client’s sensitive information while still letting you work with other clients. Just make sure any agreements like this have reasonable time limits.

Get Access: Guide: Ways to Build Strong Relationships With Clients 

Beware of Warranty Clauses 

Warranty clauses are basically promises that certain things are true or that specific outcomes will happen. They often come with obligations like issuing refunds or redoing work, so you’ll want to limit them when you can.

If you do need to include a warranty, make sure it’s something you can actually deliver and control. For example, a software developer might offer a six-month guarantee against defects—that’s reasonable and within their control.

Remember, a good consulting contract creates a fair deal that protects both you and your client. A well-written contract sets you up for a strong working relationship, so don’t be afraid to suggest changes and work together to find something that works for everyone.

Learn More: Consulting Agreement Templates and Contracts Guide  

More Tools and Resources Available for Independent Contractors

If you’re seeking more resources to support your journey as an independent contractor, visit MBO’s blog for expert insights and advice. Our blog covers a wide range of topics, from financial planning to client management, to help you succeed in the world of self-employment. Plus, if you’re looking for opportunities in your field, join our talent marketplace to connect with top clients and exciting projects. 

The information provided in the MBO blog does not constitute legal, tax or financial advice. It does not take into account your particular circumstances, objectives, legal and financial situation or needs. Before acting on any information in the MBO blog you should consider the appropriateness of the information for your situation in consultation with a professional advisor of your choosing.