In the back of your mind, you know that before entering into a new agreement with a potential client, you need to have a freelance contract in place. A contract sets the tone for your working relationship, provides a scope of work to consult if a client gets overly demanding, and also gives you a legal basis to fall back on if things go sour and you’re owed some money.
Without a legal background, creating a freelance contract for your business can seem a bit daunting. And if you’re just getting started with freelancing, you might not have a lot of extra money in the bank for one-on-one legal guidance.
So what’s a freelancer to do?
In partnership with Freelancers Union, AND CO has created an in-depth freelance contract template. To give you the best understanding of this tool, and freelance contracts in general, we outlined some of the most essential contract clauses to consider for any client relationship.
Related: Why You Should Always Use Contracts and Agreements
To establish a level of comfort between yourself and the client, it’s important to agree upon payment terms before work begins. Don’t wait until after a project is done to discuss payment.
Determine what makes the most sense for you and your business. Here are a few common types of payment terms:
- Due on receipt: Payment is due when the client receives an invoice.
- Net 30, net 60, etc.: Payment is due 30 (or 60, etc.) days after invoice is sent.
- Upfront payment: The best way to make sure you’re covered is to require payment before the project begins.
- Split payments: For a large project, you might ask for half of the payment up front, half upon completion, or several payments throughout, based on different project milestones.
You may have your own preferences, but it’s likely that the client company’s accounting/accounts payable department also has certain guidelines to be followed. Be open to negotiation here, but make sure that whatever you work out with the client, you’re comfortable with the situation.
Because payment is so important to the freelancer who doesn’t receive a steady paycheck, and can be a point of contention, consider additional contract clauses on your freelance contract template to ensure that it happens on time. (Add these into your free invoice template in AND CO too).
Some freelancers charge a late fee if payment isn’t received within a set amount of time. You might instead consider a reward for an on-time payment instead of the standard late payment “punishment” (although both can be a motivator).
If a client pays early, or on time, some freelancers will opt to offer a small discount—perhaps 3 to 5 percent of the invoice total. Before discounting your services, increase the price charged according to the contract to offset this “discount.” By motivating clients in this way, you get paid on time, your client feels good about doing it, and you can still pocket 100 percent of the money you’ve earned.
Scope of Work
An important consideration for your freelance contract template is to define the scope of work for every client, in as much detail as possible. This is where AND CO’S ‘Project Details’ option comes in super handy.
A scope of work lays out the specifics as to what you’ll be providing to a client as part of your working relationship. Here are a few things to keep in mind as you lay out the scope of work (SOW).
- Avoid making guarantees, unless that’s something you’ve explicitly promised a customer. For example, if you’re creating a contract for SEO services, don’t guarantee first page results. Instead, use the scope of work to share how you’ll be implementing SEO best practices to positively influence ranking.
- Be as specific as possible with deliverables. For example, if you’re offering social media marketing services, how many platforms will you be posting on? Are you creating content, or just scheduling it? Will you be running ads? How much budget will you handle? Will you spend time on engagement activities? How much time each month? Regardless of your niche, it’s important to think through every detail. Defining the scope of work will also serve as a roadmap for you when you formally kick off the project.
- Define complementary activities. Will you be executing any one time setup activities as part of an ongoing agreement? Are you guaranteeing a certain number of meetings each month? The more detail you use to flesh out your freelance contract template, the more protective you can be of your time, especially if a client is showing signs of “scope creep.”
Once you’ve created a detailed scope of work, use it to keep yourself honest, and to fall back on if a client gets more demanding than what they’re actually paying for.
More: Looking for more tools and resources for freelancers? Find 600+ here.
It might seem logical that if a client pays for your work, they should retain ownership rights. But in some situations, it doesn’t make sense to give up your ownership rights completely.
Therefore, your freelance contract template should include a clause that allows you to retain ownership rights if it makes sense for your business. For example, if you’re a writer creating an article for an online publication, you could potentially make additional income by retaining your ownership rights, and republishing your article in a print publication. Depending on the outlet of the original piece, you may get pushback on this clause. Determine on a case-by-case basis where it makes sense to retain ownership rights.
In some cases, you may be more interested in being able to share finished work on your portfolio than keeping ownership rights. If a company requires you to sign an Non-Disclosure Agreement (NDA), this likely won’t be possible (though it doesn’t hurt to ask!). AND CO’s contract tool, for example, allows you to define the specifics regarding either situation if they are important to you.
On that note, your freelance contract template should include clauses for everything that you deem crucial for your business. Some additional considerations, based on common freelance issues, include:
- Kill fee: If a client backs out of a project, this ensures that you still get paid for work already completed.
- Limited revisions: It’s fairly common practice to offer at least one revision on a project (especially if you’re just getting to know the client), but payment for excessive revisions should be built into your freelance contract template.
- Expenses: If you need to assume expenses on behalf of a client to complete a project (travel, software, etc.), the terms need to be defined ahead of time, especially with consideration as to who’s responsible for said expenses.
- Handling of Disputes: Legal considerations for how issues will be handled. If you’re in different states, this could be especially important.
For more on contracts and agreements, listen to this episode of the Six Figure Freelancer Audio Course, where Caitlin Pearce of Freelancer’s Union talks about why you should always use a contract.
Freelance Contract Template: Essential Contract Clauses
Each industry and freelance working relationship are unique. It’s essential to have a freelance contract template that can be amended based on the situation.
What do you consider standard as part of your freelance contract template? Help other freelancers to protect themselves by sharing your thoughts on Twitter with @andco.