Don’t Get Screwed: Freelance Contracts & Legal Stuff You Can’t Ignore

So you’re freelancing now, or you want to start. You put an offer out to the world (or to your hairdresser or mom’s best friend) and you are super excited when a client comes in the door. Now what? Well besides the process you should already have in place (that we talked about last week), there is ONE BIG GLARING THING you have to have to realize.

You are now in business.

What does that mean exactly?

Well, not just that you are making money on your own terms (which is awesome) or that you are one step closer to freelancing freedom (even better).

It means you are business owner.

Yes, even just taking on a little almost-free gig on the side means you are a business owner. Legally.

And there are some things you just don’t have the luxury of ignoring anymore. Like contracts, and taxes, and privacy policies and bank accounts.

So that’s what we’re going to talk about today.

How to not get screwed. Starting first and foremost with contracts.

Why you need a contract

I remember my first “big” real freelancing gig. I was so excited to have landed it and nervous about whether or not I was ready.

I always advocate starting before you are ready. But one of the first questions I got from the client was, “Ok, you can send us the contract along with the invoice”.

Eeek.

I need to send a contract?

So next step, scrambling around the internet downloading all kinds of different “examples” and trying to piece together something that seemed right.

You’ve been there right? (or you just opened another tab to start at first site of the word “screwed” above)

I sent it off, but stressed during the whole project if the information in it was what I needed, accurate or even legal. I mean, what’s the point of a contract if it’s not legal?

Turns out it was a bit of a disaster. Luckily, it was a family friend.  So I am pretty confident I won’t actually have legal problems with the lack of real legality in the contract.

So why was it a disaster?

This contract also covered a monthly retainer for on-going maintenance work. And, being inexperienced (and honestly stupid) I didn’t include in it as much as I should have.

For many months, I was asked to do so much work that was outside what I imagined our contract to cover- but I failed to actually include in the contract. It was a constant awkward struggle each time I was asked to do something, not being able to easily say no by pointing to the contract.

So here is the short list of why you need a contract:

  • To have something to refer to when a client asks you to do stuff you didn’t initially quote for. Fail to include everything, and you can end up putting in a lot more work than you are getting paid for.
  • To protect yourself in the case that you need to cancel the project. What happens if you get sick or have to go out of town for a emergency, or find yourself with a client from hell that you simply cannot continue working with (it happens).
  • To protect yourself if the client decides to cancel the project. You put in a lot of work already, you deserve to get paid whether they use that work or not.
  • To ensure you get paid, when you are supposed to get paid, for the full amount that is agreed upon.
  • To look pro and have your clients take you seriously! Most clients will think you don’t know what you are doing if you don’t have a contract, and they’ll be scared that they aren’t protected either if there isn’t one.

I can’t tell you how many times I refer to a contract during a project. Most clients don’t fully understand the different aspects of the work I do and moreso the amount of work involved for each individual task.

Having it clearly stated, with their signature, ensures you are getting paid for what was agreed upon, and paid more if more work is requested.

Once you have a good contract in place, next time they sneak in a little “oh, could you create another graphic for the sidebar, it won’t take long”, I can politely respond, “That isn’t included in our current contract but I would be happy to add that on”. Bam. No worries.

What you need in your contract

So that all sounds great right? But there is one catch.

It has to be a good contract.

And a legal one.

Some items you MUST have in your contract:

  • The name’s & addresses of all people involved
  • A clear outline of what is actually included (details here, details!). Example: X pages content insertion, X premium plugin, X sidebar graphics, X number of revisions, etc. The more detailed you are the better.
  • The price, when each payment needs to be paid and how, and what happens if there is a late payment (penalty fee?)
  • What happens when either party cancels
  • Who owns the work after it is completed
  • Can the work be used in a way other than it is initially intended?
  • Whether or not you are able to share client details with third parties (are you planning on outsourcing some of the work?)

Piecing together bits and pieces you find on the internet will not cut it. Plus, you don’t even know what all that legal jargon means. Technically, you should get a lawyer to draft one for you to ensure it’s actually legal. But that can cost upwords of $1,000. Eek.

If you’re just starting out that can seem practically impossible for just one measly contract.

So what to do instead? I’m gonna tell you in a bit, but first….

Other stuff you need to stay legal

If you’re doing business online, it isn’t just about the contract.

Website Privacy Policy & Disclaimer

Did you know, if you write some advice in a blog post, someone could technically take your advice, have a bad experience, and SUE YOU because they got the advice from you?

That’s why you see “Disclaimer” & “Privacy Policy” on so many websites.

You need one.

And not one that you just copy & paste again from the internet.

Create an actual business entity

Once you accept money, your government will automatically put you under some business category. But it might not be the best one. You might end up paying enormous taxes, when a simple change in registration could have prevented that.

You need to know what options you have and which one is the best for you.

LLC…..Sole-Proprietor…..Corporation…..and others depending on where you live.

I didn’t really know the difference, do you?

Well you should.

And if you a like me, googling it doesn’t quite answer the question. But hiring someone to explain it to me didn’t seem right in the itty bitty beginning stages of my business.

Make sure your designs, photographs, words or other works of art can’t be stolen or used without your consent.

Do you protect your work or know how?

Did you hear that story recently where a blogger’s website name was used to promote a big ad campaign for Adecco? They stole his stuff! It was a big legal fiasco, but in the end he got rewarded for the theft. (And made Adecco donate to one of his favourite charities!)

I’m not a lawyer. I can’t give you the answers for your unique situation or give you copies of my contracts.

But I want to draw attention to what you need to learn.

Because without it, You may get screwed.

What I can do however, is point you to the amazing resource I used to find out FOR REAL what I needed without having to hire a lawyer.

You could hire a lawyer to make all these contracts and documents for you, and an accountant to sort out your business entity & tax stuff. But this would cost on average $8,000 for everything you will need.

Or, you can sign up for Small Business Bodyguard.

This incredible resource covers all the topics above without all the legal jargon, and includes all the lawyer-drafted contract templates you need.

No more worries whether or not that contract you pulled off the internet really is legally-binding. No more worries that someone is going to steal your work.  Stop crossing your fingers and hoping it will be ok. Because that’s the worst strategy in the world (I’ve been there)!

You have everything you need to build a thriving LEGAL business in one place.

I personally use the SBB contracts for all my projects and go back to it again and again when trying to understand how I need to keep my ass protected. I plan on using it in the future when I collaborate with others and need just-the-right contract in place for that situation. I am a happy affiliate for the program, but I wouldn’t recommend it to you if it wasn’t an incredibly useful and worth-while purchase for me.

I can’t tell you how much of a relief it is to know I’m doing things the right way.

It’s written by Ash Ambridge from The Middle Finger Project, so it’s funny, easy-to-read and jargon-less. And all the legal info and contracts are done by her lawyer Rachel. So you can be assured that it’s the real deal.

Now it’s your turn.

Where are you at with your legal stuff in business? Have it all figured out, or ready to learn more. Let me know in the comments!

-Leah

Leah Kalamakis Leah Kalamakis is the founder of The Freelance To Freedom Project and a web designer/developer for brilliant entrepreneurs. When she’s not hanging out in the FTF Community, you can find her people watching on the streets of NYC. Come say hi on Twitter, Instagram, or Facebook.

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{ 11 comments… add one }
  • Leah, oh how I wish I had read this 3 months ago! I too have experienced the problem of scope creep and additional work that is hard to avoid because of contract issues. I’ve learned my lesson though, and will be ensuring I don’t make it again!

    Would be interested to hear what you missed out of your retainer that you later realised should have been included. For me it was email support. I got the website setup fine but the client keeps filling their mailbox on the hosting and turning to me.

  • This is so spot on! Exactly what I need right now. Thanks for this detailed post.

  • Great post! Been reading a lot about freelance contracts. Thanks for the info here!

  • Deandra

    This is by far the most helpful blog I have come accross with all my research, I’m glad I found it!!

  • Em

    So glad I came across this! I’m just starting out with freelance work and realized I need to figure out all the legalities of being an independent contractor. Eek! This post was very helpful. 🙂

  • This was very helpful I am thinking about whether to make my name into an LLC and the contract part is great.

  • I’ve definitely found a lot of freelancers could be doing better at protecting their business. Cashflow, contracts, business insurance (surprisingly not mentioned in this article). Hopefully articles like this can nudge people in the right direction!

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