Working with clients involves signing lots of different contracts.  To make profits from a contract, you need to define what your clients can expect from your services and what’s in for you. Unfortunately, drafting one is tedious; plus, you can never be sure what to include.

Instead of using contracts, most small businesses prefer working with clients based on trust, which can be quite disastrous. Creating a written agreement that specifies your terms and expectation is the only way to guarantee profitable and reliable results.

In this article, we’ll look at six key steps to creating profitable client contracts. Let’s dive in!

Step 1:  Understand the law

First, you need to learn and understand the legal system’s basics within your state. Suppose you write a contract without proper knowledge of the law. In that case, the contract will be rendered invalid and end up losing the profits and protection you were expecting.

In the contracts, you can specify where disputes will be handled and which state’s law will dictate those disputes. This clause is essential, especially if you and your clients live in different states. Unless there’s a specific reason for you to consider another state’s law, always choose your own state.

Step 2: Include the basic elements

For any written contract to be legally binding, it needs some basic elements. If you fail to include these essentials elements, you could end up losing your profits. Some of these basics’ essentials include:

• Signatories: It entails the full legal names of both parties involved in the agreement.
• Timeline: Defines the exact date that the contract commences.
• Contract duration: Here, you state the length of the contract and the expiration date (where applicable)
• Payment terms: Establish payment terms based on project deliverables, billing schedule, payments methods, and schedule. Include any incremental payments and how you expect the fee to be either hourly or per project.
• Signature and date: Have both parties sign the contract to give it legal force. You can go and visit the CocoSign e-signature platform that enables quick online signing.

• Termination: If your client decides to break the contract, you want to ensure your business is protected. Any action that’ll lead to termination of the contract should be spelled out.
• Intellectual rights: Determine who owns final copyrights, particularly if you’re creating original work for a client. If you hold copyright or patent, don’t let it go. 

Step 3: Specify project scope

Scope of a project is a vital element of the contract that defines what you’re being hired to do and the actions needed to complete the task at hand. It’s critical to know what expectations are on both sides to guarantee profitability.

The work scope includes basic elements in step 2 above, plus important information like the project objective, deliverables, quality requirements, and other useful assumptions.

For a long term project, including critical milestones enable both parties to know what’s due when. To ensure a regular workflow, setting up a retainer agreement is the best way to go.

Step 4: Use unambiguous words

Drafting a contract in the right language is important. A contract isn’t supposed to create traps that could be argued and lead to profit-eating claims. The agreement’s contents should be crystal clear, objective and outline essential details in whatever style you choose. 

Once the document is easy to understand to have any legal force, whether you refer to it as a contract, a proposal, or an agreement, it doesn’t matter. 

If you’re checking out the basic contract template to use, search for CocoSign to get free downloadable contracts customized for your individual use.

5. Ask the right questions 

While carrying out final checks on any contract, ensure it’s profitable and delivers a satisfactory experience.  Some of the fundamental questions to ask yourself include:

1. Does the project match our skillset? Clarify within your workforce if you can provide what the client wants or whether you might need to outsource(expensive) expertise
2.  Is it deliverable:  Before you take up the project, first understand the requirements and outcomes the client expects from you? Then determine whether you can fulfill them. Ask for clarification to be safe.
3. Is it worth the effort? Figure out how much time and effort are needed to accomplish what clients want.

6. Consider adding some legalese about the working relationship

Making a profit out of a project is our main concern. More often than usual, companies get into trouble with tax agencies for mistaken identities where an employee is miscategorized. 

 So, if you’re working as an independent contractor, include a language that states that you’ll take full responsibility for filing your own tax. By doing so, you’ll help them avoid any potential taxation issues. Therefore, saving a considerable amount from the project.

Conclusion 

Clients contracts are essential in setting expectations with your client, understanding project details, and guarantees payment. A slight mention of contracts can intimidate even the most hardened clients. However, any reasonable client will understand that the contract stands to benefit both parties. If you are handling multiple clients, it is advisable to invest in a contract management software.