Essential Contracts for Small Businesses: Companies use contracts since day one and encounter them with each new service, employee, and collaboration. Contracts make the legal basis upon which you build any relationships with clients, partners, suppliers, distributors. They also provide you with the legal environment to sell your products or services.
Here we discuss the contracts you need to make if you haven’t done so already. These cover your company’s basic activity and handle your necessities.
Table Of Contents
10 Contracts that Cover Your Company’s Activity Flow
1.Exclusivity Agreement Contract
The exclusivity agreement contract enables you have a competitive advantage against other goods or service providers from you are. The exclusivity agreement contract regulates the terms of your collaboration with a client and places you in a closer commercial relationship with your clients.
- With this contract, you become the sole provider of a specific good or service to a client.
- You may need a service or a product from a supplier.
- You agree with the client or supplier upon to what extend the exclusivity is valid.
- The agreement provides transparency regarding the exclusivity period and scope.
- By allowing it to become exclusive, you can personalize the collaboration according to your company’s needs.
2.Service Contract
This is the non-exclusive form of the above agreement. You might have heard about it as the Agreement for Professional Services. The contract defines the terms under which you provide a specific service to another company. It also points out your responsibilities and liabilities.
When compelling such a contract, make sure you include:
- Your fees;
- Delivery time;
- Additional fees, if anything goes wrong;
- Liabilities limitations based on those fees;
- Responsibilities in any scenario regarding the services delivery.
3. Sales Contract
Do you sell products? Then you need such a contract, as a basis to issuing further invoices. The sales contract is not necessary if you sell goods directly to final customers. However, if you plan on having a distribution network, then you should establish sale terms and conditions.
In this contract you lay out:
- Price per unit or package;
- Terms and conditions of sale and distribution;
- Necessary equipment;
- Accessories and additional products.
4. Employment Agreement
The employment agreement shows the outline of a job you offer to an employee that you’ve just hired. You can also hear about it as a Job Contract, or Employee Contract. By having such a document, you avoid any kind of misunderstanding and regulate disputes that might occur.
It includes:
- Working hours;
- Salaries and benefits (and commission, if necessary);
- Confidentiality regarding your intellectual property;
- Other specific responsibilities, such as handling your company’s email or social media accounts.
5. Lease Contract
The lease contract is mostly helpful for your business activity, as it includes space or equipment lease. Pay attention to the landlord’s requirements and responsibilities and negotiate as much as possible. Once you have chosen a space or type of equipment, make sure you won’t need further adjustments to the contract.
You should focus on:
- Price outline, including tax increases;
- Detailed terms of lease;
- Your responsibilities and landlord’s obligations;
- Flexibility in operating the space or equipment.
6. Website Terms of Use
Your new or already existing website may bring forward details about your company, or help you sell your products or services. Either way, you should have a Terms of Use Agreement to have a transparent relationship with its users. The agreement is available on your website and the user can reach it easily.
This online unsigned contract lays out:
- Your responsibilities regarding the information from the website;
- Limitations regarding third-party safety (external links);
- Details regarding privacy policy;
- Copyright protection warnings and disclaimers;
- Jurisdiction of possible disputes.
7. Accounting Contract
Any small or growing company can hire an accountant or an accounting firm to handle its finances. The accounting or bookkeeping contract reveals the scope of the person or firm that works with your records. Besides daily activity, you will also need quarterly, monthly or even yearly reports that your accountant needs to develop and verify. They also calculate and handle your company’s taxes. A good contract will give your accountant the opportunity to help you avoid any kind of penalties.
This specific contract includes:
- The accountant’s or firm’s contact details and license;
- Details about the accounting services;
- Hourly, monthly or quarterly charges;
- The state laws that govern the agreement.
8. Loan Form
Financial aid from banks or institutions comes in handy, especially if you own a small business. However, you need to pay attention to the lender’s responsibilities and borrower’s restrictions. Usually, you can negotiate this contract. So, before signing it, make sure you understand:
- Loan cost and payment schedule;
- Any kind of penalties;
- Loan flexibility regarding advance payment;
- Borrower’s warranty;
- Default possibility and details.
9. Harassment and Anti-Discrimination Policy
Harassment and discrimination become more and more sensitive as the business environment continues developing. By developing such a policy, you protect your employees during their everyday activity. This contract defines harassment, discrimination and what can harm or offend your employees.
Before complying it, make sure you have law assistance, as each state has specific laws regarding harassment. The contract should focus on:
- Equal opportunities;
- Sexual harassment definition;
- How employees can report harassing behavior;
- Consequences for harassment authors.
10. Purchase Order
The Purchase Order or PO is the first document that you receive when providing a service or good to a supplier or business client. This is a guarantee that the actions you take to deliver that good/service lead to a sale. As a business, you will receive POs from suppliers and hand them out to customers or partners. The document legally binds the handshake between you and a client to follow its natural course. Upon receiving a PO, check:
- Quantity and price of the order;
- Payment terms;
- Delivery details;
- Number and date;
- Specific requirements for the product.
Contracts Protect Your Business
There’s a wide variety of contracts you will encounter, especially when your business starts growing. You will issue and receive letters of intent, collaboration agreements, employment termination contracts, bank form and many others. It’s best if you hire an attorney or collaborate with a legal firm to make sure your documents comply with state regulations.
Each contract is a warranty that a collaboration goes flawlessly and transparently. Clients and collaborators might require specific contracts that you might also need in your business operations. Agreement documents provide a legal and professional environment for all the goods or services you supply and receive. Handle contracts with care and they will handle your business!
