When writing small-business contracts, it's important to have all the essential details in place.

Starting a Small-Business Overview

Forming and running small businesses involves many legal processes and contracts. This could be creating a simple invoice for an order or forming an employment compensation agreement. Getting acquainted with the different types of forms and contracts is important, especially for those the business decides to draft themselves. It's essential to remember that all contracts are enforceable by the law, so it can be helpful to hire a trained legal professional to look over them.

Essential Contracts for Small Businesses

There are many different types of contracts for small businesses. A business contract is when goods are sold or services are provided. The contract can be customized based on what terms are wanted for the business deal. A service contract will define exactly what the business provides or what another company provides.

With an independent contractor agreement, it's important to have agreements that are signed with every short-term employee or consultant that's used. A release of liability is used by operators of businesses when the company needs to release themselves from liability. This is used when damages or injuries are a possibility from an activity the business sponsors or owns.

With an equipment lease, the contract is used if equipment will be leased or the company plans to lease out their own equipment. It can also be used if they're an LLC and have plans to lease personal equipment, such as a car, to the business.

A non-disclosure agreement should be signed by possible employees before interviews to make sure important information about the business doesn't get out. With a provisional patent application, the invention or product will be protected before the full patent filing happens. This allows the company to use a patent pending notice and set an official date to file the patent.

A noncompete agreement is used to stop former businesses partners or employees from competing against the business. An employment agreement states the obligations and right of all salaried or full-time employees. An employee handbook clearly states the guidelines for employees so they know what's to be expected.

Employment Offer Letters

One of the smartest ways to protect a business from legal liability with an employee is to send an employment offer letter to all prospective employees. This will help clear up any potential misunderstandings. The employee needs to sign and return it so there's evidence of an agreement. The following should be in an employment offer letter: 

  • Responsibilities of their job 
  • The benefits and salary 
  • The specific job offer 
  • Stating that the employee is at will, so they know they can quit at any time 
  • Having the employee sign a confidentiality and invention assignment agreement 

This letter includes the entire agreement of both parties and can only be changed in the future in writing. It needs to be signed by both the employee and employer. If there are any disputes, they will be handled by the confidential binding arbitration.

Confidentiality and Invention Assignment Agreements

Employees will have access to the confidential information in a company. Many businesses also expect employees to come up with products, ideas, inventions, and business strategies. To ensure employees keep this information confidential, they should sign a confidentiality and invention assignment agreement.

Signing this covers the confidentiality issues, but it also states that all ideas and products belong to the company instead of the employee. If the company wants venture capitalists or any other investors to invest in the company, they'll expect that these agreements are in place for the employees.

Service Contracts for Small Businesses

If a company is in charge of providing professional services, it needs to have its own standard services contract form. This agreement defines the terms and conditions wherein the company provides services and lists out specific responsibilities and liabilities. It's important to have a service contract in place.

This helps the business avoid undue liability and misunderstandings. It also gives the company flexibility in finishing the services, sets limitations for liability, and states the fees for each job.

If you need help with small-business contracts, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.