Thirty percent of companies hire freelancers. Hiring a freelancer allows you to hire an individual to help you with anything from graphic design or social media management to creating videos or accounting services. You, too, may utilize independent contractors to meet deadlines, handle staff shortages and fill in talent gaps. Before you hire freelancers, though, create a detailed contract.
Why your Business Needs a Freelance Contract
The independent contractors you hire for temporary jobs are not your official employees. To get on the same page and protect your company, you need more than an oral agreement. Your freelance contract will be specific and clear as it outlines details about the project, including payment, deadlines, confidentiality, and other conditions of your work agreement.
For the freelancers, a contract provides peace of mind. As they create your company’s promotional video, complete remodeling projects, or perform seasonal deliveries, they know exactly what type of work they will perform, how long they have to deliver the goods or services, and when they’ll get paid. Signing a contract also motivates your freelancers to commit adequate time and energy to the project.
The contract protects your company’s assets and proprietary information, too. A contract reduces your liability during a project disagreement and gives you legal recourse if a freelancer steals privileged information. Additionally, you will need copies of all freelance contracts if your business undergoes an IRS audit.
What to Include in a Freelance Contract
When creating a freelance contract, include several details:
Include contact information, such as the address, phone number, email, billing address, and contact information for your company and the freelancer. This information ensures both parties can contact each other throughout the project process.
Project Details and Scope
Record details about the project’s parameters and expectations. Be as specific as possible to ensure you get the product or services you need, to verify that the freelancer knows what’s expected and to prevent misunderstandings. This part of the contract will also outline steps you will take if the work isn’t completed on time or as expected.
Protect your interests, including sensitive, confidential and proprietary information, when you require freelancers to protect details about the project’s work and clients. You can ask freelancers to sign an NDA before you begin contract negotiations or include it in your formal contract.
Preserve the relationships you have with current clients and protect your interests. For example, if you hire a freelance graphic designer to create graphics for your clients’ presentations, the non-compete agreement prevents them from offering their services directly to the clients.
Define deliverables and milestones. Include specific delivery dates and details about what happens if the freelancer misses a deadline.
Describe who will pay for expenses such as software, stock photographs or mileage. While most independent contractors take sole responsibility for these expenses, your company may wish to cover some or all costs associated with specific projects.
Outline when the freelancers will be paid and the payment total. Be sure to include the hourly pay rate, if applicable, and who’s responsible for billing. For payments made in increments, include the project and invoice deadlines and the exact amount of the payments. Remember to add information about acceptable payment methods and how quickly you will pay after you receive an invoice.
Detail which party holds the final copyright to the finished project. In most situations, freelancers retain full rights until they deliver the milestone or final project.
Relationship of Parties
Specify that you are hiring freelancers as independent contractors, not employees. You may also need to include that the freelancers are responsible to pay their own income taxes.
Review the procedure for handling disputes over incomplete or completed work and other contract details.
Remember that both your company’s representative and the freelancer must sign the contract. It’s not legal or binding until it’s signed.
DIY Contracts Versus Hiring a Lawyer
You can customize a freelance contract template online or hire a lawyer to write one. With a legally-binding DIY contract, you can write in understandable language and customize each contract. Alternatively, a lawyer can write a clear, concise and specific contract that covers your legal bases. Ultimately, the decision is yours.
If your company hires freelancers, you need a contract. Use these guidelines to create a thorough and clear contract that protects your company and your freelancers.
Guest post: About the Author
PJ Taei is the founder of Uscreen, a video monetization platform to help you sell any kind of videos online.