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Business Management

A Freelancers Guide to Contracts

Emily Schmidt
Emily Schmidt

Contracts can be very elusive for many freelancers. They’re often long and have a ton of technical jargon. Everyone tells you growing up to make sure you fully read a contract before you sign it, but oftentimes there's a lot of things in there that you're not sure what they exactly mean or other things you need to think about.

If you're not able to create the contract yourself, there are some things that you should make sure to evaluate. 

Payment Terms

Payment terms should be outlined in the contract. When you’re creating or evaluating a contract make sure the questions below are answered. These will help remove any ambiguity from the payment process. There are many considerations for payment terms - how often will the freelancer be paid? What is the process for submitting payments and invoicing? Are there any payment fees and who is responsible for paying those? In addition to the questions above about the process of getting paid there is also the consideration of what happens when a client doesn't pay. Is there a late fee?

Understanding the payment terms within the contract is a way to protect you if you're not paid. Hopefully, this doesn't happen, but you want to be protected if it does. Other things to consider are If you're being paid on a retainer basis, you should consider how you want the money to be paid. It’s not uncommon to have either the full amount or 50% paid upfront, so understanding what’s best in your situation, and what other freelancers in your field do as the industry standard.

Statement of Work & Scope Creep

The statement of work is typically a list of services that you are going to perform within the work. This can be either be very vague or very specific, depending on the type of freelancing that you perform. There are also multiple different types of payment options that are possible - retainer, hourly, or project-based. 

Scope creep is most often present within project-based payment terms. Within the contract, is there any protection for you as a freelancer if additional work is asked for? Having something outlined around how this will be handled is something that can be very valuable in the future, and is something that should be included in contracts that you create. 

Depending on your line of business, the more vague or more specific statement of works can benefit you. The best thing to do is understand for your business, are you more protected with more specificity or less and optimize towards that. 

Non-Compete Agreements

One of the most important things to look at within a contract is if there is anything included about non-competes. As freelancers, our livelihood depends on our ability to work with different clients. If there is a contract that prevents us from working with the client's competitors or anybody else in similar positions, either while the contract is happening or for a period of time after the contract ends. 

Some states, like California, don't allow non-competes and protect the individuals residing within the state, however, removing this from contracts or being aware of what you're signing up for is something that can be valuable for self-protection in the future. 

Intellectual Property

One final area that we'll cover in this article is who owns the intellectual property. This is most relevant to writers with creative work, but understanding who owns what is created is valuable to know and understand. If you are writing something or have built something for someone, do you own the rights to share it with other people or even including it within your portfolio? Understanding this information upfront is another really valuable way to protect yourself within your career.

If you're interested in learning more about contracts for specific types of contractors check out our Graphic Design Retainer Contract and Digital Marketing Contracts for Freelancers.

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