Whether you are a single employee operation, home based business or a complex multifaceted organization, you must have contracts and agreements in place to protect yourself and those you support. Don't leave yourself or others exposed to potential harm. Here are 5 basic contracts you need to have when you are in business.
1. NDA or Non-Disclosure Agreement
This agreement simply binds someone to keep a secret. An NDA can be unilateral (one-way) or mutual (two way) it protects your proprietary information. Having a NDA allows you to seek damages and/or have a basis to have a court stop trademark infringement. Who needs to sign one: everyone that is working with you.
2. Non-Compete Agreement
Agreement between two parties, typically an employee and employer, stipulating the employee agrees not to use information learned during employment in subsequent business efforts for a set period of time. Enforceability of a non-compete agreement varies from state-to-state. Check the laws of the states you will be doing business in. Non-competes can also come into play when you sell your business, particularly if you have plans to stay in the same industry. Who needs to sign one: Employees and Contractors + in some cases former business owners if there business has been sold/acquired.
3. Sales Contract
A written sales contract will help you and the other party better understand the agreement you’ve entered into together. Having a contract in place can also minimize the chances of a dispute later on. Who needs to sign one: Employees and Contractors + in some cases former business owners if there business has been sold/acquired.
4. Independent Contractor Agreement
If you are hiring people to take on tasks like copywriting, social media management, graphic design or a bookkeeper, you need to have an agreement in place that stipulates rates and terms of payment for the services provided. Who needs to sign one: Any external talent retained to provide services
5. Employment Agreement
An employment agreement is entered into between an employer and an employee at the time the employee is hired that outlines the exact nature of their business relationship, specifically what compensation the employee will receive in exchange for specific work performed, according to according to Entrepreneur.com Employment agreements are not cut and dry documents. Employment and hiring laws vary in each state or country you are operating your business in. Who needs to sign one: Anyone that works in your business, is part of your business and performs duties dictated or controlled you.
Always consult a legal professional about what to include in contracts and agreements and what to avoid.
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