Running a small business comes with big responsibilities—serving your clients, managing your team, and keeping the books balanced. But one area many small business owners overlook is legal protection—specifically, having the right contracts in place.
Without clear, well-written agreements, even the best business relationships can end in confusion, conflict, or costly litigation. At Brodersen Law, we help businesses build strong legal foundations—starting with the contracts that matter most.
Here are five essential contracts every small business should have, and why they’re so important.
1. Service Agreement / Client Contract
Who it’s for: Businesses providing services to clients or customers (e.g., consultants, designers, contractors, marketing agencies, etc.)
Why it matters: This contract defines the scope of work, payment terms, deadlines, expectations, and what happens if things go off-track. It also helps prevent misunderstandings and gives you legal recourse if a client refuses to pay or demands more than you agreed to.
Key clauses to include:
- Scope of services
- Fees and payment schedule
- Timeline and deliverables
- Termination rights
- Dispute resolution
- Intellectual property ownership
💡 Pro tip: A handshake or email isn’t enough. A clear service agreement protects both sides and can save thousands in potential disputes.
2. Independent Contractor Agreement
Who it’s for: Businesses hiring freelancers, gig workers, or independent service providers.
Why it matters: Misclassifying workers is one of the top reasons small businesses face audits and fines. This contract spells out the nature of the working relationship and helps establish that your contractor is not an employee. It also protects you if the contractor mishandles work or discloses confidential information.
Key clauses to include:
- Independent contractor status
- Scope of work
- Confidentiality and non-disclosure
- Payment terms
- Ownership of work product
- Indemnification
✅ Avoid IRS penalties and confusion by making your contractor agreements crystal clear.
3. Employment Agreement (or Offer Letter with Legal Terms)
Who it’s for: Businesses with employees, even just one.
Why it matters: While not always required by law, a written employment agreement clarifies expectations, compensation, job duties, and important policies. It helps reduce the risk of employment disputes and can include non-compete or non-solicit clauses where allowed.
Key clauses to include:
- Role and responsibilities
- Compensation and benefits
- At-will employment status (if applicable)
- Grounds for termination
- Confidentiality and IP protections
- Restrictive covenants (if enforceable in your state)
🛡️ Prevent lawsuits before they start by setting the terms of employment upfront.
4. Operating Agreement (for LLCs)
Who it’s for: Any LLC, even if you’re the only owner.
Why it matters: An Operating Agreement defines how your business is structured and managed, how decisions are made, and what happens if a member leaves. It’s especially critical if you have partners, but even single-member LLCs benefit from this document to show courts or banks that your business is separate from your personal finances.
Key clauses to include:
- Ownership percentages
- Voting rights and decision-making
- Profit and loss distribution
- Rules for adding or removing members
- Dissolution terms
📘 An Operating Agreement is the blueprint for your business. Don’t operate without one.
5. Non-Disclosure Agreement (NDA)
Who it’s for: Any business sharing confidential information with clients, contractors, employees, or partners.
Why it matters: Whether you’re pitching an idea to investors or giving a vendor access to your client list, an NDA helps protect your proprietary information from being disclosed or misused. It also shows that you take your intellectual property seriously.
Key clauses to include:
- Definition of confidential information
- Obligations of the receiving party
- Duration of confidentiality
- Exclusions (e.g., public knowledge)
- Remedies for breach
🔒 Your ideas, data, and strategies are valuable—treat them that way.
Final Thoughts: Strong Contracts Are Good Business
Contracts aren’t just for big companies—they’re essential tools for small business success. They help set expectations, reduce risks, and keep your relationships on solid legal ground.
At Brodersen Law, we help small business owners draft, review, and negotiate contracts that work for your goals, your budget, and your industry. Whether you’re starting from scratch or updating outdated templates, we offer flat-fee services and personalized guidance to help you protect your business with confidence.