Small business operations usually have several moving parts. In addition to overseeing daily operations, owners will also in responsible for entering into agreements that make it possible for the enterprise to function. There are several important documents you may need to support your venture’s operational and long-term success. Therefore, it’s important to ask: What contracts does my small business need?
Understanding the Importance of Small Business Contracts
According to a recent report, an estimated 36% to 53% of small businesses are sued annually, and 43% are threatened with lawsuits. In addition, approximately 90% of all businesses are sued at least once throughout their life span.
Small business lawsuit plaintiffs may be customers, vendors, employees, partners, shareholders, and others. One way to protect your enterprise from suit is behaving well-drafted contracts in place.
When an owner starts a new business, it can be an exciting time where the focus is more on developing a marketable product or service than on contracts and their formation. However, these legal documents are usually essential to supporting business operations and protecting management and owners from liability.
Here are some of the contracts your business may need:
Sales or Service Contract
Your sales or service contract will contain important terms regarding you, your client or customer, payment, liability, warranties, breach remedies, and possibly dispute resolution. When properly drafted, this key document will provide your business with the certainty and protection it needs to grow and thrive.
Employment-Related Contracts
Running a small business often involves assembling a workforce to support operations. When hiring, it’s important that you and the other party are on the same page about what is being offered and what will be expected during employment.
Offer Letter: Depending on your industry, it may be helpful to use an offer letter that states the candidate’s duties, pay, bonus structure, and other important details.
Non-Disclosure Agreement (NDA): If your business involves proprietary products or practices, you will want to consider having your employees sign a non-disclosure agreement (NDA). The NDA notifies the employee of confidentiality requirements both during and after employment and provides owners with legal recourse.
Non-Complete Agreement: If you have concerns that an employee may leave and use proprietary information to open their own business or benefit a competitor, you will want to consider using a non-compete agreement. The legally-binding contract will limit an employee’s post-employment activity for a specific amount of time to prevent unfair competition.
Independent Contractor Agreement: Depending on your business needs, you may want to use independent contractors instead of employees. When those who provide labor are not your employees, you will want to have a written agreement that sets out your respective rights and responsibilities. It’s also important to know that calling someone an independent contractor doesn’t automatically make that person one. You will want to ensure that the individual is not at risk of being classified as an employee.
Indemnification Agreement
These agreements serve to limit liability and can apply to customers, vendors, employees, and others. The party entering into the agreement with your business is averring not to take legal action against your entity outside of certain events taking place.
Privacy or Confidentiality Agreement
Today, data privacy is at the forefront of almost everyone’s mind. If your business operations involve using sensitive or restricted information or details, you should have an agreement in place preventing employees and other relevant parties from disclosing confidential data and information.
Vendor Agreement
If your small business relies on vendors, you will want to have detailed vendor agreements that provide terms related to the goods or services, delivery dates, quality control, quantity and quality, payment, and other essential details.
Every business is unique, and, as such, they may need these or another combination of contracts to protect their interests. The one thing that these and other agreements have in common is that they should be drafted by an experienced business law attorney who is working to protect your interests. You don’t want to risk relying on the other party to develop language that could impact you and your operations. Further, there is far too much at stake to create an agreement without the benefit of counsel.
If you are considering starting or have a Florida small business, you should contact an experienced business law attorney to help evaluate your contract needs and develop agreements that protect and benefit you and your enterprise.
Contact an Experienced Florida Business Attorney
Attorney Richard Sierra at the Florida Small Business Center assists clients like you with commercial leasing, business, and litigation matters. As always, Our Goal Is to Help You Succeed™. For an appointment, you may call us at 1-866-842-5202 or use the contact form on our website. We represent clients throughout the State of Florida, including Coral Springs, Coconut Creek, Boca Raton, Delray Beach, Pompano Beach, Sunrise, Fort Lauderdale, Miami, West Palm Beach, Jupiter, Deerfield Beach, Stuart, Port St. Lucie, Orlando, Naples, Fort Myers, Sarasota, Tampa, and surrounding communities.