7 Business Deals That Require a Written Contract
Running a small business means making deals and agreements all the time. Often it's just a verbal nod from both parties but deals can mean a written contract.
There are lots of business situations where you could use a written contract but there are also some where you almost have to in order to protect your business. Telling the difference is important unless you have enough cash to keep an attorney around full time.
Rather than leaving it to chance, check out our list of the most common business activities that need a written contract.
- Hiring employees. If you're not doing this already, you are putting your business at risk. A good employment contract sets out employee expectations and covers termination procedures. That gives you something to protect yourself if an unhappy ex-employee slaps you with a lawsuit.
- Partner agreement. Too often business partners don't make a written agreement about how to divide the business when the partnership ends. One partner can want out for a variety of reasons that aren't negative, including retirement, moving, or financial problems. Make sure you put in writing what to do if that happens.
- Working with vendors or clients. Your business relies on relationships with others. If you make an agreement that requires your business to respond in a certain way, it should be in writing. Then if anything goes wrong down the line, you can show how it was meant to be.
- Sales. This is a subset of number three but it's good to stress the importance of documenting sales. Not only is it necessary for taxes, the law requires certain sales to be in writing. To cover your business put every sale is writing by always giving a receipt.
- Leases. Getting a commercial lease in writing is vital to any good business. A good commercial lease should include provisions on how the space can be used and what happens to changes or installed equipment when the lease ends. If you only have an attorney look over or draft one contract, it should be this one.
- Hiring independent contractors. Anyone you work with should have a written agreement but independent contractors are especially important. You need to establish that the worker is not an employee and thus not entitled to tax withholding or other benefits.
- Licensing your work. While running a business, someone may approach you about licensing your copyrighted work. That's a great opportunity but only if it's done right. Make sure any agreement ensures that the licensed use will reflect well on your business and doesn't last longer than you want it to.
If you need a written contract, you don't want to take a DIY approach to it. Contact an attorney you can trust to draft it for you. Then you'll know you're in good hands.