I often talk about getting the right processes and systems in place for your business as a way of ensuring your success by being able to deliver a consistently reliable service while making things easier for you to manage. Contracts are an integral part of this not only for protecting you as a business owner but also for helping your clients to understand their position too.
In this blog I want to dig a little deeper into the reasons for having contracts with your clients, and where to source the right freelance contract templates for your business.
Contracts are about establishing boundaries
Think back to when you were an employee. You knew exactly what you had to do, when it had to be done for, who was responsible for ensuring you did the work and what would happen if you didn’t do it. There were clear boundaries for who did what and it was easy to understand why this was the case.
When you’re freelancing with clients, things are less clear cut.
If you’re designing a website, who will be responsible for the photos and graphics? You might expect your client to provide all of these elements and they might be expecting you to source them! There are many more examples of these grey areas where confusion can easily happen and what should be an easy working relationship can become incredibly difficult.
A contract establishes the boundaries of what you’ll be doing (to the letter when you detail it in your scope of work), what you’re not responsible for, how long it’ll take and what your client will be responsible for.
Contracts ensure you are complying with the latest legislation
It’s not just about ensuring your contract will stand up in a court of law should a client make a claim against you (or vice versa) but there’s other legislation to consider too, particularly IR35. IR35 “Off-Payroll Working Rules”, was bought in by HRMC to ensure that freelancers and sole-traders are genuinely self-employed rather than being forced into self-employment by employers trying to reduce their tax and NI expenses.
This means if you’re working with larger organisations (employing more than 50 people with an annual turnover of £10.2 million or more, or with a balance sheet worth £5.1 million or more) you need to ensure that you’re on the right side of IR35 legislation. The best way to do that is by having a contract that shows you do not meet the tests of employment, which are:
Control – your clients should have no control over what, how, when or where you do your work; so, make this clear in your contracts by stating your hours of work, method of delivery, etc is important.
Substitution – can you send a substitute to do your work, i.e., an associate, or another freelancer? Remember it’s your business being contracted to do the work, not you as an individual.
Mutuality of obligation – this means you are not obliged to accept the offer of work from your client and they are not obliged to offer it. An employer would have to find work for the 37 hours a week their employee is contracted to them for, as a freelancer that obligation doesn’t exist.
Contracts help to boost your profitability
One of the hardest tasks as a freelancer is actually getting paid for the work you’ve done. Once you’ve sent those invoices it can be a tense time waiting to see if they’ll be paid on time or if you’re going to have to do some chasing.
By having your payment terms clearly laid out in your contact detailing when you should be paid, how to be paid and consequences for not paying on time, your clients are much more likely to get those invoices paid on time. If not, you have clear grounds to pursue legal action to get the money you’re owed.
Why freelance contract templates?
Ideally, you’d consult with a small business lawyer to get bespoke contracts and agreements drafted for your business. Few of us can afford that expense, but contract templates are available online that, while more generic in nature, have still been written by legal experts to ensure that you and your business are protected.
They’re easy for you to understand and use, you just have to tweak the highlighted text to match your needs. You then have the peace of mind that the contract is legally valid, you don’t have to waste hours creating something new and your clients can have confidence that they’re protected too.
Knowing where to source your freelance contract templates can be tricky. There are many online websites offering this service but how can you be sure they are appropriate and safe to use? Check for:
Their location and company registration details – you want the UK only, specifically England/Wales as Scotland and Northern Irish law differs somewhat (unless you’re in those areas).
That they are legally trained – you want barristers and legal consultants who have the right knowledge, training and expertise to ensure things are how they should be (again, they should have trained in your resident country).
Reviews – as with anything, social proof is vital for ensuring you get what you’re being promised. Check where these reviews are coming from, dates if they’re there, and how genuine they sound.
Ongoing support – is support offered to help you adjust the contracts to your needs?
The website that meets the criteria for me every time and is well established in this field is KoffeeKlatch*, so I urge you to check out what they have to offer as the first port of call. I have also used these contracts in my own business for the last 5 years so can personally recommend them as well.
I hope you’ve found this blog useful. Legal stuff can be difficult to get your head around and often gets pushed down those to-do lists but it’s so important to ensure that how your work is protected under law to meet your insurance requirements and to ensure your working relationships are happy and successful from day one.
* Please note I am an affiliate of KoffeeKlatch and may receive a kickback if you purchase.