If you run a business that involves any outside parties, then you need to understand contracts. From creating a new document to negotiating the terms, it is essential that you know the basics. We know how important it is to create the perfect legal document, so we have created this guide on everything you need to know when it comes to contracts.
Business Contracts Are Essential
As a new entrepreneur, you may think that you have larger issues to tackle before thinking about contracts, but the fact is that understanding these matters needs to be your first priority. Contracts serve as a record of commitments between your organization and the company you are making a deal with. A well-written contract is also essential because it helps you to prevent conflicts that could sink your business.
In addition to helping you to prevent legal issues at your new company, a contract also helps you to understand your rights and obligations for how you can run the organization. Contracts are great because they give you a document that you can look back at whenever you need clarification on what you can and cannot do.
Tips for Creating Contracts That Will Stick
When creating contracts, you need to be very careful about your wording so that you say exactly what you mean and what you expect from the other party. Everything must be in writing because that is what everyone will refer to and you don’t want to leave anything out. Remember that you can keep the contract simple. You don’t need to have a 100-page document. You just need to spell out the expectations so everyone can understand.
A good contract will also specify payment obligations and say how much money is due and at what time. You do not want to leave any gray areas or you are setting yourself up for missed payments. Finally, make sure that you agree and write down the circumstances for termination of the contract. It may not be a great thing to think about but sometimes it might be you who decides to terminate.
Important Considerations When Negotiating Contracts
While creating a solid contract is important, properly negotiating the terms is key. One way to ensure that every point is discussed is to break down the contract into smaller pieces that are easier to analyze. That way, both parties can agree or disagree and you can modify the contract as necessary. Along with that, also keep the terms simple so everyone can understand what they are getting into and if it is feasible.
When negotiating with money, you first need to ensure that you have your financial ducks in a row and that you know how much money you can offer or accept. You need to understand your business’s financial health, and you can do that with a good accounting system. If you are a new or smaller business, you may have to do this yourself, so invest in trustworthy accounting software. That way, you can manage all of your finances from one platform and you can use that system to get deeper insights into how much money you have to spend and what you need to keep your business going strong. Plus, a good accounting program is also helpful even when you aren’t negotiating contracts because you can make and receive payments faster.
Tools You Can Use to Write and Modify Contracts
Now that you know the nuts and bolts of contracts, let’s talk about how to actually get them in writing. If you don’t have a lot of resources, you can start by using a word processing program but if you plan to write and modify a lot of contracts then you will want to look into contract management software like PandaDoc or Ironclad. Essentially, these programs allow all parties to see the contract and track any changes that are made. You should also consider allowing the e-signing of the contract so you can send it to anyone in the world and get a quick signature.
Here’s one last tip: use a logo maker app to add your business’s personal logo to your contracts. That’s a nice personal touch that adds some professionalism, and best of all, it’s free!
As you can see, there are many factors to consider when creating a business contract. Consider the tips above, make sure that you cover all of your bases and make edits when necessary and you will be able to run your company with confidence.