When owning a business or being self employed as a contractor or freelancer, you’ll often find yourself having to regularly deal with contracts on a regular basis. Whilst contracts are now commonplace in our society, ranging from a simple financial contract to a larger work contract, it’s still vital that you read through all contracts thoroughly whether you are creating or signing them. We’ve put together this blog to aid those who are regularly signing contracts and to inform them about what to avoid before entering an agreement they might not be happy with. As an accountant we find ourselves regularly dealing with contracts so, here’s our top 4 tips on creating and signing them:
Always Look for Additional Charges
When creating or reading a contract you’ve been given, it’s really important to look out for additional charges you might face – let’s face it no one like additional charges, especially ones they don’t expect. If you spot additional charges but you don’t agree they are fair, then it’s worth returning the contract with a comment on these specific charges. On the other hand, if you are creating a contract for a client, you should always ensure that any additional charges the client could face are clearly documented in the contract. This could potentially include items such as VAT, travel expenses, completion payments/bonuses. If you miss any of these items and don’t specifically reference them in the contract, you could struggle to claim them on your invoice. This will then make getting your correct payments more difficult and could negatively affect your financial accounts.
Unsure? Always Ask for Clarification
When reading a contact there’s always going to be a few things you aren’t sure on and this can be the most difficult part of any contract. What’s important is that you never assume anything if you are unsure as this can only cause a potential disagreement later down the line. For example there may be a section in a contract that doesn’t make much sense to you but doesn’t look important; however it’s still worth asking for clarification on the section, just to be sure it won’t have any negative effect or impact further down the line. You shouldn’t worry about people thinking you’re being difficult; it’s much better to clarify now, than find out later and face disastrous consequences.
This also works both ways when creating a contract for a client. It’s crucial you ensure everything is as clear as possible in the contract for the client, as well as making them aware that if they need anything clarified, all they have to do is simply ask. Failure to give clarity could lead you to end up in court at a later date.
Detail of the Services Provided
A challenge people often face when creating or receiving a contract is understanding exactly what service will be provided. When creating a contract for clients; you should always try and think of every service you will provide and document it in the contractual agreement. If you miss putting a service in the contract, and client then signs it, you won’t be expected to do the service that is asked, however this will more than likely upset the client if they were expecting that service, and could affect gaining future work with them. Regardless if you are a contractor, freelancer or sole trader, we think it’s so important to be clear on the services being delivered in a contract. This is will really help maintain a healthy relationship with your client. However what’s most important is that once a contract is signed and agreed, complying with all of the requirements contained in the contract. Most specifically when contracting for the provision of your services.
Ask Yourself if Anything is Missing
This is something that most of us will forget about when reviewing a contract. When we read a contract we typically look for mistakes or discrepancies and simply check if it’s the same contract as the one that was verbally agreed, but it’s easy to forget to check if anything is missing. This tip again applies to whether you are receiving or sending out a contract. Looking for something that’s not there is a lot easier if you are receiving a contract because you know what you are expecting, however it can be a little trickier when you are writing one. It’s best to first check if you’ve ticked off the basics. The UK government provide some advice regarding this, but then it’s worth getting someone you trust to go over the contract and ensure you haven’t missed anything.
Whilst we don’t offer financial contract support ourselves, if you’re a contractor, freelancer, landlord or small business and need first-class accountancy support then get in touch with us at 3 Wise Bears.