Contracts for Freelancers Part One: Why They Are Important
If you work as a freelancer, it is very important that you always make a freelancer contract with your clients. Well, you definitely should be! Even if you want to immerse yourself in your work immediately, you should always take time for a contract. The paperwork is not fun, but has a great value and can protect you and your client in cases of unforeseeable circumstances. Taking a project without any form of paperwork is an uncertain journey that guarantees frustration and misunderstandings. Not to mention the problem that there is no binding agreement between you and your customers on how much they have to pay you. So, in this article, we are going to take a top-line overview of contracts and in a later article, go into even more detail - here at Kontist, we know you need as much information as possible to succeed!
You have already written an offer that your customer has accepted, so it's time for you to present a contract to the customer. You need a contract:
- For accountability
- To protect you (applicable to both you and your customer)
- That the client has a scope of the project and is clear about what your tasks are
- You are not a lawyer. This is not what you have applied to even be; Writing contracts, signing documents and swimming through paperwork and administration. No, you are not a lawyer, but you are self-employed and this job title comes with many responsibilities and roles. As a freelancer, you are responsible for how you work, how you get paid, what and when you work. You probably have the most rewarding yet challenging job out there.
Maybe you did some client work in the past without a contract and it all went smoothly. Well, that's rare (and risky). You're an entrepreneur now, which means you have to treat your freelancing as a serious business. That means legal documents, proposals, contracts - and really, contracts are a huge mistake to forgo especially when your business is your sole income.
When it comes to freelance contracts, there are two types of contract: service contract and work contract. A contract is considered a service contract if the contractor offers services to the customer but is not obliged to complete the services successfully. However, the customer is obliged to pay the contractor for his services. For a work contract, the contractor undertakes to complete the work.
In a freelance contract, you should set out and lay out everything and anything that could be considered important. And while invoicing is an important thing to get right, so are contracts.
The main points that should be in the contract are
This is probably the most important part of a freelance contract and it is crucial that you make sure at the outset that any conditions that the customer might have in mind do not penalize you. For example, it is important to make it clear from the outset whether you want to be paid a lump sum or per hour (Link: https://kontist.com/posts/freelancer-hourly-rate-charge), and when you will be paid. For a large project that spans several months or is open, you must set the payment frequency (for example, monthly).
Some clients are very picky, some can not really decide what they want from you. That's why you have to have a clause that sets a reasonable number of revisions, after which you'll get an amount paid per hour or correction, otherwise you could be stuck with work endlessly. Having such a clause will not only save you from perfectionist customers but also make them focus more on their desired changes and hopefully make them think more carefully about their choices.
If you have ever heard the dreaded words, "Hey, I just thought of something big that we really need to include in this project!", you will understand exactly what this clause ensures: always put the exact details of the scope of the Project. You may also feel a little triggered like me at this thought, so sorry about that. You have to have a very clear idea of what is in the contract and what is not, because endless unpaid extra work should not be one of your tasks. If a client wants something extra, a clause should say that extra work is negotiated separately and will make you pay for everything you do.
Depending on the type of freelancer you are and the type of clients you are working for, there are various types of copyright and a number of issues that may arise. Many customers want the work done for them to be unique. This means that the granting of copyright should be at least for the first use, and there are all possible options and nuances for certain types of work.
Sometimes you are the one who wants to set a deadline, but often the client himself will have a deadline in mind. Having that set out in a clause in the contract is something that will keep you and your customer focused and should help prevent inappropriate delays.
Freelance employee contract
When creating a freelance contract you should protect yourself against bogus self-employment. If you do not know that you are dealing with bogus self-employment, it can cost both sides a lot. The first step you can take to protect yourself is to call the contract "freelancer contract" instead of "employment contract". In addition, the contract should also read:
- That every freelancer is responsible for his own taxes and other charges
- How much money each freelancer gets
- What tasks each freelance employee should perform and how he ensures it
- It is also recommended that the contract contains a clause that allows freelance employees to collaborate with other customers and that they can reject orders.
To get projects from clients, you also have to offer a reasonable hourly rate. Some of the biggest factors here are experience, location, the cost in your area, season and the volume. If there is a shortage of work, this can trigger a bidding war for freelancers, which can result in hourly rates falling. If there is a shortage of qualified freelancers and an influx of work, this can lead to higher hourly rates. To find a full-time equivalent for your wages, you should find out the average salary that a company would pay for full-time employment. Once you have found out the salary you can divide it by 52 (number of weeks a year), and then by 40 (working hours per week).
This will then result in a suitable hourly wage for the work. It is also important to look at the competition when you define your prices. Your customer's location and the competition offers greatly affect your hourly price. If you offer too low prices, you will undercut yourself and the market. If you put the price too high, you can have problems finding work. Once you have an hourly rate, it's up to you to continue monitoring the trends and average salaries in your profession. A simple way to know the current prices is simply to ask other freelancers.
As a freelancer, you should also know how much time your next project will take. Being able to effectively estimate the time for each project is of great importance. If you can not do that, then you can not know how much you can calculate for your work or how best to build your schedule.
Before you can estimate how long a project will take, you need to understand exactly what is involved with the project. You can not judge a project well if all you know about the project is that the client wants a logo or a website. If you are not sure what the project is all about, ask the client questions until you understand everything with certainty.
If you accept projects through agencies or collaborations where you are not communicating directly with the end-user, you should be extra careful. You have to make sure that the person who coordinates the project fully understands both your job and the customer's requirements. If that's not the case, bad communication can cost you a lot of time and money.
To get a good estimate of the time, it is best that you divide the whole project into its components so that you have an overview of all the things you need to do. Here you can analyze how much time you need for each part and get an overall rating. It is always best to give yourself extra time if there are any unexpected events (for example, illness). It is always better to promise the customers a longer time frame and finish the project sooner than a smaller one and then break the deadline. There are many freelance templates on the internet that you can download and use to make a contract.
If you want to position yourself as a professional, you have to sign contracts with your clients. Even if it seems like hard work, it's worth it in the long run. Without a contract, everything hangs in the air and you are exposed to many dangers. Only when all the terms and conditions with your customers are clearly defined on paper can you be sure that you will succeed.