When It’s Time to Create a Contract for Your Small Business

Written by: Ethel Lair

Business contracts are essential to running and protecting a business. They establish the rules of the business, including how decisions will be made, how disputes are resolved, what happens if one party can’t or won’t follow the terms, and how much equity is owed to each party.

Contracts have been around for a long time. But in recent years they’ve evolved with technological advancements and changes in the law that make them more important than ever before.

Small Business Resources

Small Small Business can help solve problems of the smallest businesses, nonprofits, and community groups in rural Minnesota and beyond. Here, we bring you tips and information to help you create a contract that serves you and your business best. 

Creating a Business Contract

Business contracts help to provide a foundation for the working relationship between parties that are involved with each other. It is important to understand that there are different types of business contracts. What is important to consider when creating one for running your own business is whether you want it to be legally binding or not and if it needs to be legally binding, what type of legal jurisdiction do you want the contract to take place in?

When creating your own business contract, make sure that you fully understand all the clauses in the agreement. For example, if one party breaks the contract, how will this affect them? Is there an escape clause if they break the agreement within a certain period of time?  Create a contract that spells out the rights and obligations of each party in detail, agreeing on when parties can terminate contracts, and agreeing on how to resolve disputes. 

Negotiating a Business Contract

Make sure to have all the necessary documents ready before you start the process, so it goes smoothly. This includes making your financials, business plan, and personal information easily accessible to the other party. If negotiations go south, make sure you have the evidence of what was agreed upon before signing anything, or else you might not get what you bargained for. 

In order for your construction business financials to be in order, be sure to use online construction accounting software. With it, you can easily organize income and expenses into tax categories, share your books with your accountant, or export important documents.

Be aware of the law before negotiating, do your research and find out what local laws apply. Researching these laws will also help you identify value propositions for your company and negotiate them appropriately.

Be prepared for contingencies.  Know what to expect in terms of what might happen if one party doesn’t comply with the terms of the contract, as well as identify key considerations for a given situation.

Use Helpful Tools

There are tools you can use to present, edit, and modify contracts. Make sure your company contracts, invoices, and documents all contain consistency when it comes to your company logo, which is easy to create quickly and use across multiple platforms when you use an online logo maker. Simply choose a style and icon and add in any text you’ll need, and you’ll be able to view an assortment of logos and adjust their fonts and colors. 

You’ll also benefit from tools to help keep your proprietary information private by using appropriate data security systems, using non-compete agreements, and conducting yearly audits. 

The legalities of contracts can be complex, so business contract terms and conditions should be read carefully. The language in a contract is usually very technical, but it should be easy to understand and use the document to judge its meaning. Make sure your contract is easily understood by all parties so you won’t have to go back and do it again.

About the author:

Ethel Lair understands that it’s easy to live the life of your dreams when you know what you want to leave behind for future generations. She created legacybasedliving.com to help her site visitors create financial plans that allow them to leave a legacy of support and love for their families and communities.