Why contracts are important for freelance work

Published Mar. 29, 2021 by Andy L. in Freelance 101

Contracts are important for freelance work because these set forth agreed-upon expectations between freelancers and contractors. Working as a contracted individual or with contracted individuals often comes with varied terms and agreements per project.

Prior to committing to any project drafting a contract that outlines the details of the work to be performed/delivered makes the process smoother as a whole.

Rather than spotting issues mid-project you can identify what could be potential issues in the beginning. This saves time, limits surprises, and reduces costs.

Some large-scale projects with a lot of people involved may require more official contracts in place. If this is required, it may make sense to get some legal help when drafting new contracts.

For the purposes of this article, I'm assuming you will be generating your own contracts in-house to save time and money.

Contracts for freelancers

I believe that no contract is perfect and sometimes you need to amend it for every new client to satisfy various needs and requirements.

My own contracts have evolved over the years. There are a handful of key components I have found that make it into each contract. Your results may vary here so take this as more of an opinion rather than tried and true method.

Scope of work

Every project I create a contract for needs a documented scope of work. In this scope of work, you can be as detailed as you like. I tend to write one or two summarized short paragraphs with bullet point deliverables if necessary.

Most of the time this would be a summary of what has already been discussed between the parties involved in the contract. I approach writing this as if someone outside of the project were to read it, they would understand what's being asked of whom.

Timeline

Another important factor to consider for freelance work is the timeline it should take. This can be an estimate. You'll want to factor in all the time you will be spending on work, travel, meetings, and more as it pertains to the project.

I have found that displaying a graphical representation of the timeline helps certain parts of the project be plotted against a specific timeframe. This could be in the form of a color-coded bar chart for example.

Example:

Say you are tasked with building and designing a website. You might have a target deadline for the design phase that comes before the coding phase. If you can display these visually it makes the timeline much easier to comprehend for the contractor who is hiring you.

Freelance project timeline example

Billing options

Pricing a project can be tricky. In some cases, pricing per project makes sense, and in others pricing as a retainer or hourly model makes even more sense. I tend to price based on timeframe and deliverables.

If the work is ongoing and there's potential for future projects with the same contractor you might consider hourly or retainer-based work. If it's short-term (a one-off project) with a pretty basic scope, a project-based pricing strategy probably makes more sense.

Regardless of "how" you bill you will want to outline what is expected of the contractor when it comes to billing.

On top of including your quote for pricing, you should also include verbiage around late-fees and penalties if payments are late. Protecting yourself and enforcing these rules is important to instill in your clients that you mean business.

As a bonus, I often include different billing options to give clients options when it comes time to pay. For example, if the project is priced as a lump sum cost I'll break the total price down into installments:

  • 30% deposit
  • 30% completion of a core milestone or feature
  • 40% final fee following project completion

This makes it more manageable for the client to pay if the final total is larger. It also ensures commitment from both sides by adhering to the timeline proposed before.

FAQs and deliverables

I keep a sheet of FAQs that I update periodically that come bundled with each contract. These questions tend to answer the following:

  • Who am I working with on this project?
  • Do you own the work that you create?
  • How will any files or deliverables be delivered to me?
  • How can I reach you and where/how will we communicate?
  • Can I reuse your work for other projects I may have in the future?
  • etc...

Depending on the line of work you are in these questions may vary. It's important to cover as many tracks as you can here to save yourself trouble in the future.

Make sure you get a signature

It's pretty obvious but sometimes it is forgotten. Get those signatures and sign the contract yourself!

Pro tips and tricks

  • Create a template for your contracts and make them easy to edit later for future projects
  • Create a project "kit" on your computer that is a series of folders, documents, and other criteria that pertains to your line of work. Think of this as a blank slate to store contracts, assets, and more. I wrote a blog post/tutorial about using a tool that comes on Apple computers called Automator that can create a new mac app to automate this process for you.
  • Having the above branded with your logo/company name goes a long way with first impressions for new clients

Contracts for contractors

Just like freelancers, a contractor should probably have a contract for the freelancer to agree to as well.

NDA or no NDA?

Non-disclosure agreements are sometimes common when it comes to working on freelance projects. This essentially means you can't disclose that you are working with a certain company publicly. This is annoying for freelancers at times since they often want to display the work they produce in their portfolios. I've worked with amazing clients in the past but due to non-disclosure agreements, no one will ever know. It's a bummer but sometimes necessary.

Services provided

Much like the scope of work section above the services provided by a contracted individual should be documented.

Compensation

Compensation is usually agreed upon prior to seeing this in a contract. Once it is official you can add this and the expectation of pay periods as well.

Reimbursement of expenses

If a freelancer racks up expenses that you are aware of you can document these and how they will be reimbursed.

Ownership of intellectual property

Everything related to the project that the freelancer creates, ideates, and more are considered property of the contractor. It's important to include this in your independent contractor agreement.

Return of property

If a contracted individual borrows any property to perform the work they are hired to do your contract will need to have a clause about it returning at project completion.

Signatures

Get those signatures!

Closing thoughts

Contracts don't need to be super "official". The bigger the project the bigger the contract. Sometimes you might need legal help but I believe most of the time you can take matters into your own hands.

My advice is to spend some time making sure all bases are covered that you can foresee coming up in any freelance-based project. There are always instances where things pop up that were apparent before. Take these surprises as cues to refine your existing contracts and make them much better than before.

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