The Census Bureau estimates that there are about 32,570,855 small businesses in the United States. These entities collectively employ around 59.9 million Americans. Small businesses need to engage in multiple formal relationships with stakeholders in the course of operations.
For such relationships to be binding, these small firms need to enter into written contracts. A business contract defines the obligations that such small businesses must abide by during operations.
It’s essential to understand each small business contract. It would also help to comprehend how such binding agreements define the commitment to deliver. Especially because non-compliance may damage any legal relations between the parties involved.
Are you wondering what contracts your small business should have when commencing operations? Read on for details.
1. Non-Disclosure Agreements.
The NDA is among the most common of all small business contracts. This business contract binds parties in a specific agreement. The objective is to ensure confidentially on explicit matters.
Your business has numerous innovative ideas and concepts that your competitors would wish to infiltrate. As such, small businesses should seek to ensure that every employee signs an NDA before entering a formal employment agreement.
Such arrangements ensure that all your proprietary processes remain confidential. Once employees sign the confidential agreement, they enter into a binding business contract not to disclose any delicate proprietary information.
2. Sales Contracts.
Small businesses make numerous sales in a given financial year. However, the sales process may, at times, encounter challenges due to errors or defects.
The sales agreement is among the most important small business contract documents you need to sign. A key consideration in sales contact is the description of goods.
It’s important to consider factors such as the depiction of the goods. Most sales contracts focus on offering a vivid and detailed description of the goods and services on the sale. It helps to minimize the possibility of dispute following the sale of such goods if the condition is in contention.
Sales contracts vary depending on the intent and condition of goods in question. You can review the various contract templates online to develop a better understanding of sales contracts.
3. Lease Agreements.
Businesses with a physical location require office or factory space to help achieve important routine activities. Most small businesses can’t own land and build permanent business premises due to financial limitations. As such, leases have become a common form of contractual agreements between small business owners and property owners.
Leases could present legal loopholes if the parties involved lack sincerity. As a small business owner, the lease contracts should work to ensure you remain within the safeguards of a binding contract. A lease contract defines the space, the cost, and the period within which the agreement will be binding.
Are you looking for an all-inclusive lease agreement? It will help to consider our wide range of online templates. With the broad scope of our ApproveMe Contract Templates, you can download a lease agreement for your small business any time, anywhere.
4. Employment Agreements.
There are more than 130,597,000 employees in the United States today. With such mindboggling figures, the number of employment class and collective actions facing companies has been on the rise. That is partly the reason a small business contract is essential when dealing with employees.
An employment agreement is a contract between an employer and an employee. The agreement outlines the nature of the relationship, the scope of the engagement, and the terms of compensation. Your employment agreement should indicate the terms of hiring in line with the specific state or federal laws.
An employment contract also spells out the rights and the obligations that each party must oblige to in the agreement.
Employment contracts further stipulate the procedure for compensation or liability in case of premature termination of the agreement. You can access a well-formulated contract template online to help you with the formulation of a formal employment agreement.
5. Non-Compete Contracts.
When you employ staff in your organization, you entrust them with the list of your loyal customers. You also entrust such employees with critical information about your business.
Such information might include your supplier’s contacts. Your employees may use such information against you by utilizing it for profitable gain.
As such, you need the no-compete business contract to curtail such employees from using any business information. With this contract, your employees can’t open a similar business to yours. Especially when they’re still part of your workforce.
6. Independent Contractor Agreements.
Small businesses may not always have the capacity to manage the critical function of staffing. That means that your business may need to outsource independent contractors from time to time. Such freelance workers help to manage the labor gap in your company.
The independent business contract is useful because you don’t have to pay such freelancers the full benefits entitled to a full-time employee.
Specific states require that companies have clear stipulations relating to independent contractors. It should occur before the hiring process.
Are you trying to avoid the legal complications of employee misclassification? Then the independent contractor template is worth incorporating.
7. Partnership Agreements.
Most businesses consider partnerships as a way of managing resource shortfalls. It would help to have partnership agreements to avoid the challenges that might emerge. This contract helps to iron out any disagreements in the course of running a business.
This small business contract helps to define the decision-making process. A partnership agreement also defines dissolution clauses in case the partnership ends.
Consider Any Small Business Contract as a Must-Have?
A small business contract is an important part of any business’s survival. You need to develop a regulatory framework to deal with all the relationships with stakeholders in your business.
Contracts play a vital role in managing the expectations of parties in an agreement. You also need a contract to determine the obligations and scope of any agreement.
Was this article useful? You can read much more about entrepreneurship in our other posts. We have a wide collection of articles on small business startups.
