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A Legal Guide for Entrepreneurs

June 11, 2014

DailyWorth Expert

Lawyer for entrepreneurs, founder of Genavieve Shingle Law

genavieveshingle.com

3.    Client/Customer Contracts
 
Huge protection in the land of entrepreneurs. Client agreements set forth the parameters of the relationship between you and your clients. This includes:
a.    The length of the relationship
b.    Cost of the program (including making all fees non-refundable!)
c.    Structure of the program
d.    What happens if the client does not make payments
e.    Protecting all materials that you provide the client — a provision will be included that all of the materials provided are the ownership of YOUR company and that the clients are not allowed to give them to anyone else (like a little kid would say — mine!).
f.      Dispute resolution — just in case you need to take further legal action, you can actually choose that you want to have your dispute in a location that is convenient for you!
g.    Governing Law — it’s important to have the contract governed by the state where you run your business, as these are the rules you are already playing by.       

I always advise to send the document in PDF (or using an online signature platform like EchoSign) so that the client is unable to make any changes. Never send a contract in Word and always have the client sign first and then provide the client with a fully executed copy for their files.
 
Having a contract in place protects not only you and your business but also the client. It provides peace of mind for them that if you, as the business owner, did something wrong or didn’t provide a product or service, they would be able to get their money back. Clients want protection too.
 
4. Employees versus Independent Contractors 
 
Business is booming and you’re earning your well-deserved rock star status so you need to expand your team — or start one! Will you bring someone on as an independent contractor or an employee? Make sure you know the differences ahead of time:
 
a.    Independent Contractor Agreements       

Have a virtual assistant? This person most likely would not be considered an employee — nor do you want them to be because then you could be responsible for benefits and taxes. An independent contractor agreement clearly spells out that there is no employment relationship between you and the other person, and as a result, the other person is responsible to file his or her own taxes and obtain his or her own benefits. You would provide this person with a 1099 at the end of the year or at the end of your relationship should it be a shorter time span. This person also cannot act as an agent of the company, meaning they cannot enter into agreements with another person on your (or your company’s) behalf.
 
b.    Employment Agreements

Employment agreements are needed for those individuals you plan on having a long-term relationship with and want as representatives of your business. You, as the business owner, are then responsible for their taxes (an employee will usually complete a W-2 form) and potentially, their health benefits. Having someone as an actual employee means that they can potentially enter into an agreement on behalf of your business. These people represent your company in a public capacity. You can garner much more control of these individuals, meaning you can dictate their work schedule, location and ways that the work is done. Please also note that when you have employees, you will need an employee handbook that will describe worker’s compensation, vacation/sick days, company policies, etc. 
 
Please note the difference between an employee and an independent contractor. Essentially, it depends on how much “control” you have over this person in their working capacity at your company. If you want to control what is being done and how it is being done, then this person would more likely be an employee; an independent contractor would be able to control the means and methods they use to accomplish the task.
 
So, what is that something you need? Most likely, all of the above.
 
This document is for informational purposes only and should not be construed as legal advice. Genavieve Shingle is an attorney only licensed in the State of New York and the distribution of this guide does not constitute an attorney-client relationship. 

Genavieve Shingle is a member of the DailyWorth Experts program. Read more about the program here.

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