Use Written Service Contracts for Your Clients

Independent contractors can avoid trouble by putting client agreements in writing.

When you agree to perform services for a client, you are entering into a legal contract—you promise to do the work, and the client promises to pay you for it. Many independent contractors rely on handshake agreements with their clients. Instead of writing down the deal, the contractor and client discuss what the contractor will do and what the client will pay, and that’s the end of the story.

Until the deal falls apart, that is.

Why You Need a Written Service Agreement

If a client refuses to pay, insists that you agreed to perform more or different work, says that you agreed to charge less than your usual rate, or otherwise won’t live up to his or her end of the bargain as you believed it to be, you’re in a bind. You could try to convince a court that your version of the contract is correct, but without a written contract, it will be your word against the client’s, and there’s no telling whom a judge or jury will believe. Whether the client really does remember the agreement differently than you or is intentionally trying to rip you off, you don’t want to end up in this situation.

Fortunately, there’s an easy way to avoid these problems: Always get your agreements in writing. Using written contracts will help you prevent misunderstandings, clearly define the expectations you and the client have about the job, and prove your case in court, should it come to that.
What’s more, a written client agreement can help you establish that you are an independent contractor, not the client’s employee—which will be very useful if the IRS or another government agency questions your status.

1 of 2 NEXT