Starting a business and getting it up and running can be a chaotic and stressful process, and things like contracts may slip your mind. However, small business contracts are absolutely essential and will make your business journey far more straightforward in the long run.
Understanding a Business Contract
The most important aspect of any contract is to ensure that you fully understand all terms in the contract before you sign it. Many business owners have gotten themselves into sticky situations because of not reading a contract properly. If there is any terminology or phrases which you do not understand, you should do your own research. You can also alternatively turn to a business advisor for assistance.
Structure of a Contract
There is no definite structure that a contract has to take, but a contract usually consists of an offer from one party, acceptance from another party, creation of a legal and binding partnership and a consideration (usually involving money).
Written contracts are the only contracts with any legal jurisdiction. Verbal contracts have been known to work for some businesses. But they rely heavily on the good faith of all those involved.
Contracts are invalid should they concern any illegal activity, or are misleading in any way.
What Business Contracts Does a Small Business Need?
This will all depend on your business’s needs and what industry your business falls under, but it is safe to say that most businesses will need the following:
- Employment Contracts- you are obliged to draw up a contract for each of your employees, stating their salary, working hours and other specifics that should be adhered to by both parties.
- Lease Agreements- If you are renting your business premises, you should have a very clear lease agreement in place.
- Insurance Agreements- You should definitely have insurance agreements in place that will cover you in case of loss, damage and over eventualities.
- Financial Agreements- These contracts should be put in place between business partners, so that everyone is on the same page, regarding the financials of the business.
Need some help with understanding how contracts work and which contracts are essential for the functioning of your small business? Get in touch with Aureus Financial’s team today and we can help you navigate the world of business contracts.