The Basics on Business Contracts

Business contracts are an important part of conducting business and even more important if your business operates online.  This vile piece of paper describes the job duties in detail, delivery time, payment terms, and legal terms of conducting business between the client and you.  Without a business contract that addresses expectations, procedures, and policies, it's likely you'll find yourself in a dispute at one time or another.

Contract Basics

The business contract keeps the work legitimate and protects both parties.  It's essential that both parties agree to the terms outlined in the contract and acknowledge their agreement with an authentic signature.  For every transaction that requires you to conduct a different task for your client, you need a business contract.  Some clients may not like this idea, but then again, this is a procedure that ensures both parties keep to their end of the deal.

At one time, a handshake or someone's word was all a business deal needed.  Today, transactions are a lot more complex and it is helpful to come to an agreement in writing regarding the responsibilities of both the virtual assistant and the client.

A business contract also provides a sense of security to both parties to knowing they are on "common ground" in regards to the business relationship.  A well thought out contract helps alleviate potential problems by addressing them before they actually take form.

Four Common Types

Business contracts are created to suit the situation and on an "as needed basis", for instance:

• Work-for-Hire: Companies create a Work-for-Hire contract when they are hiring an outside contractor to perform certain tasks.  The contractor works independently and is responsible for claiming the money he or she makes to the IRS.
   
• Confidentiality or Non-Disclosure: This contract protects the company's personal and confidential material.  If the company is sharing valuable client information or trade secrets, it is important that this contract be in place.  By agreeing to this type of a contract, the independent contractor is agreeing to NOT disclose business information or use trade secrets for personal gain.
   
• Non-Compete: This type of a contract stops the independent contractor from competing with your business or stealing your ideas.  Anyone that he or she comes in contact with must be addressed as your client, not theirs.
   
• Service Agreement:  A service agreement is common among online business services.  The contract ensures that both parties receive what they expect.  The client receives the work he or she has hired you for, and you receive payment for your services.  This agreement should always be signed.  If your client can't sign it, have them fax it to you.

Don't practice risky business by entering into a business arrangement and not having the proper paperwork!  Not everyone has your best interest in mind.  And in the event of something unforeseen, a business contract is your best safety net.

Contract Negotiations

It's common practice for potential clients to suggest using a business contract they've used to conduct business with in the past.  This is something you should carefully consider.  Read the fine print, as they will likely read yours, and discuss anything that doesn't apply to the services you're guaranteeing.

Most people are open to negotiating the terms on their contracts.  However, if you find the potential client difficult to work with while negotiating the terms it may be a sign of things to come.

Never work without a business contract.  Always protect your assets and your reputation with effective documentation.  The contract style may change over the years, but the bottom line is always the same.  The client must receive what he or she is paying for and be satisfied.

Information is for educational and informational purposes only and is not be interpreted as financial or legal advice. This does not represent a recommendation to buy, sell, or hold any security. Please consult your financial advisor.