As a small business owner, you have too much at stake to shrug off what may seem like a legal formality. Let’s face it, the days when a simple handshake could seal the deal and a man’s word was his bond have long since passed. When it comes to business relationships, it’s always best to make them official and binding.
Contracts cover all your bases and will supply you with peace of mind knowing you are on solid legal ground – should the need arise. And do you know the best part? You don’t need a degree in business law to draft a simple contract. Here are the top three contracts small business and start-ups will need.
Independent Contractor Agreement
Outsourcing to an independent contractor (IC) is a great way to leverage assets in order to help your business grow and scale, fill a temporary need, or bring in an expert. And since a contractor is not an employee, you don’t have to worry about workers’ compensation, withholding taxes, or providing benefits. The IC agreement is critical in defining the business relationship between the both parties. This eliminates confusion and could help prevent the costly mistake of employee misclassification.
The role and responsibilities of the IC should be spelled out in the agreement. It should state that the worker, as an independent contractor, is responsible for their own taxes and expenses. Be sure that your actual working relationship mirrors what is in the contract. If you exert too much control over how and when their work gets done, you may be stepping over the line, to an employee/employer relationship. Don’t ever set or expect specific hours and you shouldn’t put constraints on where the work is done. Of course, this agreement isn’t going to protect you 100 percent of the time, but it does prove your intentions.
Non-Disclosure or Confidentiality Agreement
Intellectual property is likely some of your most valuable assets. When sharing your company’s proprietary information with a third-party outside your organization – such as a vendor or consultant – you can have them sign a non-disclosure agreement (NDA). Some of the proprietary assets you’ll want to protect are:
- Information Technology
- Business Plan
- Marketing Plan
- Financial Numbers
- Client, Customer, or Vendors lists
Even if your partner is your spouse, best friend, or sibling, it is still a good idea to have a formal partnership agreement. This will be important as you begin to bring other stakeholders on board as they will expect a higher level of transparency and accountability.
When to Hire a Business Law Expert
You may think you can draft and execute any of these simple contracts on you own, however, it is always best to hire an attorney with experience in contract law to ensure that no mistakes are made and your rights are protected. To learn more about business law, including contracts, contact the Law Office of Todd M. Kurland today.