Legal Essentials for Freelancers: Create a Solid Foundation to Grow Your Business
One of the most important elements of building your business is to start with a solid foundation. Making sure your freelance contract essentials are covered is a critical first step.
Shalini Nandan-Singh is a contract specialist whose mission is to provide the knowledge, tools and confidence you need to know where you stand — and to stand your ground.
She believes that your business legals should be an authentic extension of your business, creating positive business boundaries that support you in working with your clients with compassion and understanding.
Shalini is a strong believer that formal, confusing legal language should be a thing of the past. She believes that the whole point of business legals is to create tailored documents and discussions that make life simpler for you to run your business. Simpler legals also make it easy for your clients to understand how you can help, and their obligations for things to work.
As part of the Spotlight Series, I interviewed Shalini to find out exactly how legals can help you optimise and grow your business. I also wanted to dig into the specifics around how legals can not only be used to protect, but also act as a handy self-advocacy tool for when you’re doing it all solo and need extra support and confidence to stand up for yourself in business.
Q. Are legals really necessary for freelancers? why?
Freelancing means you are running a business that offers your zone of genius as a service to many people.
Money is changing hands, client expectations have to be managed, and relationships need to be managed within Consumer Law requirements.
Legals such as your Terms of Service or Client Agreement provide you a platform to manage your clients so you get paid (profitability) and can run a business that suits your needs and life (sustainability).
Q. Should a freelancer use their own contracts, or agree to one provided by their client?
Always aim to have your own Terms of Engagement contract (aka Client Agreement).
Why? It’s easier to consider requested changes to your own contract than to ask for amendments in theirs.
It’s your business. Your contract will educate your client about how best to work with you so you can operate a profitable and sustainable business. Having your own contract gives you personal power in your business.
Q. In what ways does using your own contract protect you?
In addition to the above, freelancers typically deal with a variety of client types and their services are likely to be tailored to client needs.
- be unsure of what they want or need
- change their requirements
- not be clear on fees or how to pay
- need to understand realistic delivery times
- not be aware of the work they need to put in or data they need to provide
Each of these is a potential for dispute that could affect your ability to get paid and enjoy your freelance business.
Your own contract minimises the potential for loss of business and increases the opportunity for profitability and sustainability.
Q. How do contracts set client boundaries?
Contracts are an agreement between you and your client. A well-drafted contract will clarify boundaries and expectations for your clients.
Expecting clients to read your mind or have a mystical understanding of how you operate your freelancing service is not a viable strategy, so putting everything down in easy to understand writing is crucial.
Q. Can contracts help freelancers get paid on time?
Contracts are critical to timely payment, particularly when there are retainers or milestone payments involved.
Your contract formalises the agreement to pay including payment and delivery conditions and Consumer Law obligations for all parties. This means payment is more likely to be a sure thing and non-payment is managed with minimum stress.
Q. Why do so many freelancers avoid setting up and using legals in their business when they are there to protect them?
Freelancers avoid setting up legals because they:
- are unaware they need them, having not been in business before.
- don’t understand their legal requirements under Consumer Law as service providers.
- are not clear about their systems and processes to put them down into a document.
- do not understand that legals are foundational to the sustainability of the business. It goes to your credibility and professionalism and shows clients you care enough to have a well thought out contract to serve them and you.
- feel that legals are too “formal” and will scare away their clients.
- believe tailored advice and custom drafting is unaffordable.
- don’t believe they run a “real” business and consequently, they don’t believe they have a responsibility to provide transparent terms of engagement to clients.
Q. In your opinion, what’s the #1 essential legal contract every freelancer needs to have in place/use?
Every freelancer needs their own Terms of Engagement contract (also known as Client Agreement).
Q. What essential points need to be covered in a TERMS OF ENGAGEMENT CONTRACT?
Any Terms of Engagement agreement should include these key elements:
- Scope of work
- Changes in the scope of work
- Delivery conditions and deadline management
- Payment conditions
- Refund request management
- Copyright ownership
- Dispute management
- Conflict of interest
- Subcontractor conditions
Q. How can a Terms of engagement contract help a freelancer to optimise and grow their business?
The contract is a quality assurance tool for your business. It:
- is a living document that evolves with your business;
- helps you see what processes are working for profitability and sustainability, and what’s not working so you can take the necessary steps to improve;
- helps establish boundaries with clients so that you aren’t burning out;
- outlines how and when you get paid which reduces admin time.
All of these are helping you optimise your business operations, and a support foundation to grow with long-term.
Q. Can you grow/build a business smoothly and successfully without legals in place?
The short (but still complete) answer is No. Your contract gives your service and processes structure and credibility.
It provides the framework for development, successful delivery and payment, and growth for your business because your contract consistently requires you to monitor your relationships and processes.
Q. What’s the difference in protection between a legal template and a custom drafted contract? do they protect you in different ways?
Legal templates are generic. They are written either with copious amounts of information to cover all business scenarios, or they lack clauses necessary for your particular situation.
And worse… how would you know what you need without advice from someone who has looked at your business carefully?
Templates provide limited protection while custom drafted legal contracts are created specifically for your business for thorough protection.
Q. Are legal contracts supposed to be hard to read and understand?
Contracts should be drafted in simple, straightforward language that your clients find easy to read and understand while remaining legally robust. The terms should be fair, legally compliant and represent your business processes accurately.
Q. How often should your Terms of Engagement be reviewed for accuracy?
You should review your Terms of Engagement agreement whenever you:
- receive a complaint
- get a request for a refund
- are asked to change your scope of work or delivery times
- introduce a new service
- change a service
- you rebrand your business
AND annually as part of business planning!
Q. One piece of advice you have for freelancers in regards to business legals?
It’s a competitive market for freelancers. Your success depends on your difference.
You need to show that difference professionally with a well-drafted contract if you want to be taken seriously in your industry and market.
Your “clean and legal” and “transparent” processes build trust and encourage fans of your freelancing business to help your business GROW.
To ensure your Terms Of Engagement contract is working to build your business and your credibility, check out the follo:
Read more interviews from the Spotlight Series.
Robyn Kyberd / About Author
Originally published at https://optimiseandgrowonline.com.au on June 23, 2019.