Freelance Contract: What To Include [Guide]
Freelance Contract: What To Include In A Contract Or Statement Of Work
It’s no secret that the freelance world is booming. According to recent studies, freelancers now make up 35% of the U.S. workforce, which is only expected to rise in the coming years. A freelancer must have a well-drafted freelance contract before starting any project. This will help protect you and your client in case of any disputes or misunderstandings. In this blog post, we’ll discuss some critical elements that should be included in an excellent freelance contract or statement of work. So whether you’re just getting started as a freelancer or looking for ways to improve your current contract, read on for tips and advice!
Learn how to obtain self-employment insurance in your field:
Freelance Disability Insurance | Freelance Ghost Insurance | Freelance Workers Comp Insurance | Freelance Critical Illness Insurance | Freelance E&O Insurance | Freelance Airbnb Host Insurance | Freelance Commercial Auto Insurance | Freelance Commercial Property Insurance | Freelance Utah Home Insurance | Freelance Amazon Flex | Freelance Carpet Cleaning Insurance | Freelance Window Cleaner Insurance | Freelance Pressure Washer Insurance | Freelance Electrician Insurance | Freelance Mechanic Insurance | Freelance Junk Removal Insurance | Freelance Bartender Insurance | Freelance Hair Stylist Insurance | Freelance Barber Insurance | Freelance Taskers Insurance | Freelance Web Designer Insurance | Freelance Doordash Driver Insurance | Freelance Uber Driver Insurance | Freelance Plumber Insurance | Freelance Writer Insurance
What is a Freelance Contract or Statement of Work?
In the world of freelancing, a contract is king. A warranty protects the freelancer and the client and outlines the expectations for the work delivery. But what exactly is a contract?
A contract can be defined as a written agreement between two or more parties that creates an obligation to do or not do certain things. In the context of freelancing, a contract is typically between a freelancer and a client, and it outlines the terms of the working relationship.
For example, a contract might stipulate that the freelancer will deliver X number of blog posts by X date and that the client will pay the freelancer $X per blog post. Contracts can be simple or complex, but at a minimum, they should include information on services delivered, deadlines, compensation, and a termination clause.
Why Do You Need a Contract?
Consider this scenario: you’re hired by a client to write ten blog posts. You deliver the posts on time and under budget, but when it comes time to get paid, the client tells you they only intended to pay you for five seats. Without a contract outlining the scope of work, you have no legal recourse and will likely get paid less than you expected—or worse, not get paid at all.
In short, a good contract ensures that both parties know what is expected of them and provides protection if things go wrong. So if you’re doing freelance work, ensure you have a solid contract before starting any project.
How to Make Sure Your Freelance Agreement is Watertight?
When hiring a freelancer, it’s essential to have a clear and concise contract outlining the expectations for both parties. This legal document is often called a statement of work (SOW). A well-written SOW will help protect you and the freelancer by outlining the project’s scope and establishing clear ownership transfer, deliverables, timelines, and payment terms. Not sure what should be included in a freelance contract? Read on for a rundown of the critical elements.
1. Project Overview
The first section of your contract should summarize the project, including its objectives and deliverables. This will help set expectations from the outset and ensure that you and the freelancer are on the same page. Be as specific as possible when outlining the project’s objectives so there’s no room for misunderstanding later.
2. Scope of Work
The second section should outline the scope of work or what tasks the freelancer will be responsible for. Again, be as specific as possible to avoid any confusion further down the line. This is also an excellent time to mention any deadlines or milestones that must be met. If there are multiple stages to the project, ensure each is clearly defined with its deliverables and due dates.
3. Payment Terms
This section outlines how and when the freelancer will be paid, including milestone payments. It’s essential to be clear about your payment terms to avoid misunderstandings later. Will you pay hourly, per project, or at some other interval? When are payments due? What is the process for requesting invoices? Be sure to include all relevant details in this section of your contract.
4. Cancellation Policy
No one likes to think about what would happen if a project gets canceled, but it’s always best to have a contingency plan just in case. Your cancellation policy should outline what circumstances would allow either party to withdraw from the written agreement without penalty. It should also specify how much notice needs to be given in each case. For example, if you need to cancel due to financial difficulties, you may be required to provide two weeks’ notice so the freelancer can find alternative work.
5. Milestones and deadlines:
Break down larger projects into milestones with payment for each milestone, and set due dates so everyone agrees.
6. Nondisclosure agreement:
Agree not to share confidential information or proprietary materials with anyone outside the client’s organization.
7. Termination rights:
Outline what happens if either of you needs to end the contract early.
8. Change order terms:
Decide how changes and additional work will be handled, including payment for any extra hours worked or materials used.
9. Dispute resolution:
Establish a process and timeline for resolving any disagreements.
10. Signature/Acceptance of Terms:
Both parties must sign and agree to the contract terms before work begins.
These signatures should be notarized or witnessed as legally binding.
Now that you know what needs to be included in a freelance contract, it’s time to start drafting your own. Use this guide as a starting point, and tailor it to your project and business needs. Then, with a watertight contract in place, you can rest assured that you and the freelancer are protected in case anything goes wrong.
Different types of freelance contracts
1. Hourly Contracts
Hourly contracts are the most common type of contract for freelancers. With an hourly contract, you agree to work for a certain number of hours at an agreed-upon rate. The main advantage of an hourly contract is that it gives you a lot of flexibility in managing your time. The downside is that estimating how many hours you’ll need to complete the project can be challenging, making budgeting difficult.
2. Fixed-Price Contracts
With a fixed-price contract, you agree to complete the project for a set price. The advantage of a fixed-price contract is that it can be easier to budget for the project. The downside is that you may work more hours than anticipated if the project becomes more complex than you thought.
3. Per-Project Contracts
A per-project contract is similar to a fixed-price contract in that you agree to complete the project for a set price. The difference is that with a per-project contract, you usually have more freedom regarding completing the project. The advantage of a per-project contract is that it gives you more flexibility in your workflow. The downside is that you may not be compensated for additional work if the project takes longer than expected.
4. Retainer Contracts
With a retainer contract, you agree to work for a set number of hours each week or month at an agreed-upon rate. The advantage of a retainer contract is that it provides freelancers with a steady income stream. The downside is that retainers can be inflexible regarding hours and may not be renewed once they expire.
5. Milestone Contracts:
This type of written agreement allows the client to break down the project into milestones and pay in installments as each milestone is completed.
6. Equity-Based Contracts:
This type of contract occurs when a freelancer agrees to take payment in equity instead of cash. These contracts are often used with start-ups, where there is no certainty of cash payments for a certain period.
No matter which type of contract you choose, it is essential to make sure that you understand the terms and conditions before signing on the dotted line. That way, you can ensure both parties know the project requirements, timelines, and payment structure.
Benefits Of Setting Up a Freelance Contract
1. Flexibility:
Freelance contracts offer flexibility for both parties as you can work at your own pace and tailor the project to suit your schedule.
2. Cost Savings:
You don’t need to invest in office supplies, rent an office space or pay taxes when working with a freelance agreement, saving much money in the long run.
3. Learning Curve:
Working with different clients and projects helps you grow your skillset faster than with traditional employment.
4. Variety of Work:
With freelance contracts, you can work on various projects that suit your interests and strengths instead of being confined to one type of job.
5. Independence:
You are your boss and don’t need to answer to anyone else, giving you a great sense of independence.
6. Tax Advantages:
Freelancers have some unique tax benefits that traditional employees do not enjoy. For example, you can deduct business expenses like mileage and office supplies from your self-employment taxes.
7. Networking Opportunities:
Working with one client can provide access to a network of other potential clients and customers.
8. Remote Work:
You don’t need to commute or leave the comfort of your home to take on freelance agreements, saving time and money.
9. Global Reach:
You can take on freelance contracts from clients all over the world, giving you the ability to reach a much larger market.
10. Time Flexibility:
You can work when and where it suits you best without any restrictions from an employer.
11. Creative Freedom:
Freelance contracts give you more creative freedom than traditional employment, as an employer’s rules or restrictions do not bind you.
12. Quality Control:
You can control the quality of your work more directly by selecting clients instead of having another person make that decision for you.
13. Professional Development:
Working on different freelance projects helps to build skills and experience that can be used in the future.
14. Higher Pay:
With freelance contracts, you can charge more for your work than traditional employment as you are not tied to a fixed salary.
15. Personal Satisfaction:
Working on projects that you’re passionate about provides a greater sense of job satisfaction and personal achievement.
These are just a few benefits of having a freelance contract with clients. With so many advantages, it’s no wonder why more and more people are turning to freelance as their preferred career choice.
Tips for creating Freelance Contracts that Work for Both You and Your Client
1. Get everything in writing.
A written contract is the best way to protect your rights and ensure everyone understands their roles, obligations, and responsibilities.
2. Define the scope of work.
Be clear about what services you will provide and when they are completed to avoid confusion later.
3. Specify payment terms.
Include details about when and how you will be paid for your services, including any late fees or penalties for nonpayment of freelancer payment terms.
4. Address intellectual property rights.
Make sure to specify who owns the rights to any work you create so that there is no confusion down the line.
5. Include confidentiality clauses.
If you are working on sensitive information or proprietary data, include language in the contract that prevents you from disclosing it to others.
6. Include a termination clause.
Specify how either party can end the contract and what obligations must be fulfilled for that to happen.
7. Get everything signed and dated.
Ensure to get signatures from all parties to make the contract legally binding.
8. Have a dispute resolution plan.
It’s always best to avoid arguments and disagreements, but it is wise to include a plan for handling them if they arise.
9. Check for mistakes before signing.
Before you sign any contract, please read it carefully and look for any typos or errors that need to be corrected.
10. Keep copies for your records.
Make sure you store copies of the signed contract in a safe place so that you have evidence if there are any issues later on.
Freelance Contract Template You Should Have As an Independent Contractor
To help you, we’ve compiled five essential freelance contract templates that independent contractors should have on hand. From client agreements to nondisclosure agreements, these templates will help you protect yourself and your business.
1. Client Agreement Template
As a freelancer, you must have a solid client agreement template that you can use for all your clients. This agreement should outline the scope of work, deliverables, deadlines, payment terms, and more. Having a client agreement will help ensure that you and your client are on the same page from the start and will help prevent misunderstandings. Plus, a well-written contract will give you the upper hand if any disputes arise.
2. Nondisclosure Agreement Template
If you’re working with clients sharing sensitive or confidential information with you, it’s essential to have a nondisclosure agreement (NDA) in place. This agreement prevents both parties from disclosing personal information without written consent. NDAs are often used when businesses don’t want their secrets to getting out to their competitors. As a self-employed worker, an NDA can protect the confidential information you come across while working with a client.
3. Independent Contractor Agreement Template
An independent contractor agreement is a contract between an independent contractor and a client that outlines the scope of work and stipulates that the contractor will complete the job as outlined in the agreement. This type of agreement is often used when clients need short-term or one-time services from an individual who is not an employee of their company. If you’re working as an independent contractor for a client, having a separate contractor agreement in place is essential. Not only will it protect your rights as a contractor, but it will also protect your client’s rights.
4. Master Services Agreement Template
A master services agreement (MSA) is similar to an independent contractor agreement in that it outlines the scope of work and stipulates that the contractor will complete the job as outlined in the contract. However, MSAs are typically used when clients need ongoing or long-term services from an individual who is not an employee of their company. If you will be working with a client continuously, having a master services agreement in place is critical. This type of agreement will help streamline the contracting process and save everyone time in the long run.
5. Letter of Intent Template
Unlike other agreements, legally binding documents and letters of intent (LOIs) are nonbinding agreements that outline two parties’ intentions to enter into negotiations for a future transaction. In other words, an LOI signifies that both parties are serious about agreeing but aren’t ready to commit just yet.
While LOIs aren’t legally binding, they can still help outline both parties’ positions at the start of negotiations.
Having an LOI before beginning negotiations can help ensure that both parties are on the same page from day one and can help prevent any miscommunication or misunderstanding. Plus, having an LOI can protect both parties involved if talks break down.
Bonus Tip:
Use eSignatures to Sign Your Contracts Online. Nowadays, there’s no need to print out hard copies of your contracts and fax them back and forth. With e-signatures, you can quickly sign contracts online—which means no more wasted paper! Plus, e-signatures are legally binding, so you can rest assured knowing that your arrangement will hold up in court. If you’re not using e-signatures to sign your contracts online, now’s the time to start.
A Sample Freelance Contract Template
This Agreement (the “Agreement”) is made between ___________(from now on referred to as the “Freelancer”) and _________(from now on referred to as the “Client”). This Agreement will effect on the Date of a signature by both parties.
1. Services:
The Freelancer agrees to provide the following services to the Client:
2. Payment:
The Freelancer will be paid by the terms and conditions outlined in this Agreement. Payment shall be made as follows:
3. Term of Agreement:
This Agreement shall begin on the Effective Date and remain in full force until completion of all services or until terminated as provided herein.
4. Termination:
This Agreement may be terminated at any time by either party upon written 30 days’ notice to the other of its intention to terminate this Agreement.
5. Confidentiality:
The Freelancer agrees to keep all information related to the Client confidential and shall not use any such information for personal gain or profit.
6. Disputes:
In the event of a dispute related to this Agreement, the parties agree to seek resolution through mediation and arbitration by local laws and regulations.
7. Governing Law:
This Agreement shall be governed by the laws of the state of _________.
IN WITNESS of which, both parties have executed this Agreement as a binding agreement on the Effective Date.
Freelancer Name: _____________________________ Date: ____________________
Client Name: _______________________________ Date: ____________________.
What to do if there is a dispute with your client over the terms of the freelance contract?
As a freelance worker, it’s essential to understand your rights and responsibilities under your contract. However, even the best-laid plans can sometimes go awry. If you find yourself in a situation where there is a dispute with your client over the terms of your contract, here are some tips on resolving the issue.
1. Keep Cool:
When emotions run high, thinking clearly and making rational decisions can be difficult. So if you’re feeling angry or upset, take some time to calm down before taking any action. Once you’ve cooled off, you can approach the situation with a level head.
2. Talk to Your Client:
In many cases, contract disputes can be resolved simply by talking to your client and coming to an agreement that works for both parties. If you can reach an amicable solution, be sure to put it in writing so that there is no confusion in the future.
3. Get Help from a Mediator:
If you cannot agree with your client alone, you may want to seek help from a mediator. A mediator is a neutral third party who can help facilitate communication between the two parties and identify areas of agreement.
4. Take Legal Action:
Legal action may sometimes be necessary to resolve a contract dispute. If you decide to pursue this route, it’s essential to consult with an attorney beforehand so that you understand your rights and options under the law.
Final Thoughts
Whether you’re a new freelance worker starting on your own or an experienced contractor with years of experience, having a freelance contract in place is essential to protecting yourself and ensuring that you and your client are happy with the working arrangement. Here we have helpful advice for freelancers, from setting up as self-employed to getting paid on time. So make sure you read our other blogs for a successful freelance journey.
