Contracts are a necessity in business, but many independent consultants and small business owners are uncomfortable using written contracts because they assume contracts are a complicated and time consuming process, create an overly formal and unfriendly working relationship, or undermine the implicit trust that exists between you and your client.
In reality, however, independent contractor agreements are simply a written record of the agreement between consultant and client. Not only do they provide legal protection, but they also create a sense of professionalism, encourage communication, and ensure an efficient and streamlined process to complete the project. Here are four reasons to use a contract for your next project.
Should a dispute arise between you and your client, a written and signed contract is your most ironclad proof of your agreement. One of the most common objections to written contracts is the belief that verbal agreements are binding.
While it’s true that verbal contracts are legally recognized, the problem lies in the inherent lack of proof or evidence of what was agreed upon. The best way to protect yourself and your business from a legal standpoint is to get things in writing.
A proper contract will include verbiage that outlines the terms of the project, and declares your relationship with your client as that of a consultant or contractor. This could be helpful should you ever need to prove consultant status for tax or other financial purposes.
This also serves to protect your client. If a company misclassifies an employee as an independent contractor, they can be held liable for fines, penalties, and even class-action lawsuits.
Many professional disputes arise not out of malice or dishonesty, but out of a miscommunication. A well-written contract will spell out the exact terms and details of an agreement in clear language, and will give each party the opportunity to discuss or clarify any points that are unclear.
A contract should clearly outline services to be performed, milestones, a timeline for completion, duration of the contract, and payment terms and conditions. Remember, it’s important that you fully understand all parts of a contract you sign in order to protect your business and your reputation. If there’s a part of the contract that is unclear, ask for an explanation or consider having a lawyer look over the contract before signing it.
A contract not only protects you as an independent consultant, but it protects your client as well. Your willingness to bind yourself to a legal agreement can often help establish a strong relationship based on confidence and trust from your client. This may help them overcome any doubts they may have about hiring an independent consultant.
At the end of the day, a contract is a legally binding document that will help protect you and your work. It’s a chance for you and your client to put your expectations for the work engagement into writing and to clearly outline how you will achieve mutual goals. Use this important document as a chance to establish a positive working relationship with your client, define the project scope of work, and agree on duties and responsibilities.
News and notes for independent contractors and their clients. This is the January 23, 2017 edition of The Weekly Independent from MBO Partners.
The Weekly Independent, an MBO Partners column featuring news and notes for self-employed workers and their clients. This is the August 15, 2016 edition.