Have you ever wondered about the different types of contracts you need to have in place to protect your business? As a business owner, there are three contracts that should be incorporated into your business’ daily practice. These three contracts protect you and your clients:
- Operating AgreementThe documents explains the financial and function details of the business. Each operating agreement is unique to the business because it defines the specific roles the business managers provide to the business and their clients.It’s also a smart way to manage the expectations and avoid potential conflicts of all those involved in managing the business (if there is more than one owner).
- Service Contracts This type of agreement may also be referred to as a consulting agreement or an independent contractor agreement depending on the type of business you are operating. This agreement lays out the terms and conditions under which you provide services and specifically spells out your responsibilities and liabilities. Ideally, this agreement gives you flexibility in completing the services, lists the fees for the job (and additional fees if you encounter unforeseen circumstances), and sets limitations on your liability (such as limiting that liability to the amount of the services fee).
- The Confidentiality AgreementWhich is also referred to as a “Non-Disclosure Agreement” or “NDA” provides that client’s information is held in strict confidence and will only use for the purposes of the services provided to the client whether or not to enter into a business relationship with you. The key to this agreement is that you should enter into the agreement before any disclosure.
While this list is by no means exhaustive, it is a good foundation to protecting your business and your clients. I would advise you to consult a small business attorney for more details of what other agreements may be needed for your particular business based on industry and the state where you operate. You worked hard to build your business, now take the necessary steps to protect it.