Most entrepreneurs don’t like doing paperwork, but having well-organized and correct business contracts are crucial to run and operate a business. Here is a quick rundown of five types of business contracts you need to know about when starting or managing a business.

 

1. Non-Disclosure Agreement (NDA)

These contracts are legally binding between two parties which outlines confidential information that cannot be shared with anyone else outside of those two parties. If you’re asked to sign an NDA, you are agreeing to keep the information you have learned from the other person or business as strictly confidential. The purpose of an NDA is to prevent crucial business information from becoming public knowledge or to prevent those receiving the information from using it to their own benefit.

 

2. Commercial Lease

Whether it’s a shop, office, or production space, if your business operates at a physical location, you’re going to need a commercial lease. A commercial lease is another legally binding agreement between a landlord and a business tenant (sometimes a real estate broker will negotiate these agreements.) These agreements typically outline responsibilities and terms such as type of property being leased, square footage of leased space, length of tenancy, renewal procedures, rental payments, security deposit requirements, etc. It’s important to to properly read your commercial lease to thoroughly understand what is and isn’t your responsibility in case there’s been damage to the property.

 

3. Employee Contract

The growth of your business is not a solo journey, hiring the right people is instrumental to business success! In order to ensure a smooth employee experience, it’s standard practice to have written contracts to establish core responsibilities, compensation and benefits, PTO policies, employment period, termination details, and more. Having a well-constructed employee contract can increase clear communication and expectation setting, boost retention, and amplify employee satisfaction.

 

4. Contractor Agreement

So maybe hiring permanent employees just isn’t the right fit for your business, that’s completely okay. You can hire a freelancer or contractor to suit your business needs instead! Similar to an employee contract, it is crucial to have a contractor agreement to clearly define the business relationship between you (the client) and a contractor. Without this agreement, you could land yourself in some legal and financial hot water.

 

5. Supplier Contract

Need some to delivery your product into the hands of your customers? You’ll need a contract for that too. A supplier contract establishes the delivery of goods, products, or services and can protect your business from costly delays and disputes. Much like the other commercial contracts, it is imperative that a supplier contract clearly defines roles and responsibilities of both parties to avoid conflicts from arising. Some core components of a supplier contract includes payment schedules, invoicing processes, deliverable due dates, confidentiality clauses and more.

 

 

There’s so much more to business contracts that every entrepreneur should know about. But we know that the daily hustling life of an entrepreneur has a finite amount of time, we get it. That’s why we partnered up with Goodlawyer to bring you trusted experts who puts entrepreneurs at the forefront of their minds. Find the complete list of business contracts, what to include in each contract, and a $100 worth of Goodlawyer credits (plus one free Micro Service) in our Business Owner’s Toolbox.