Street smarts: Protecting yourself, work, and pay
Being an independent contractor is largely a great experience. Unfortunately, there are some bad apples that take advantage of freelancer vulnerabilities. There are also endless ways to make costly mistakes that can have devastating effects on your career.
In this chapter, we’ll cover the things most likely to trip you up and how to minimize your potential risks. The more you know about your legal rights and responsibilities, the more secure you and your business will be.
How to create solid contracts
Contracts are legal documents that outline the expectations of both parties involved in the project. This formal agreement is your shield against shady clients, uncomfortable requests, and legal trouble.
No matter your industry, it’s critical to create contracts that cover your bases. Every agreement you make should cover the following requirements.
Scope of work
When you and the client agree on the work you will be doing for them, it’s important to get it in writing. Explicitly state what you are offering for the price they’ve agreed to pay. Include details about the work involved, the review/revision process, timing, etc. The more detailed, the better.
If the client asks for work outside the scope or makes an unfounded accusation about the project, all you have to do is point to the contract they signed. You can also include your policy and pricing for adjusting or extending the original ask to avoid issues later on.
Some fields produce work that can be owned and used by one party moving forward. Make sure to include details about who owns the work and what the client is allowed to do with it. This can be legally tricky, so do your research to learn how best to protect your work if you want to retain rights to it.
For projects that will produce work you can use as samples, include information about the ways you will use it. This isn’t strictly necessary, since you can easily reach out to your clients about this topic at any time, but it doesn’t hurt to have it in the agreement.
Self-employed workers spend far too much time chasing down unpaid invoices. Prevent this hassle and protect your pay by spelling out your payment expectations. Commonly, freelancers request payment anywhere between two weeks and 90 days after the invoice date.
The more you make, the longer your payment terms can be. Don’t set lengthy deadlines if you need the funds quickly.
Late payment fees are a great way to guarantee compliance. With your strong contract and the threat of having to pay more, clients will be better about paying you on time.
In the event something goes wrong, your contract can protect you from liability and/or significant damages. It should also outline the steps and terms required for terminating the agreement, as well as potential legal action. You can find the appropriate ‘legalese’ with research or by using a reliable contract builder.
Nail your first impressions with Hectic
Nothing makes your freelance business look more professional than an outstanding contract and proposal. From the content to the design, our drag-and-drop builder allows you to create exceptional contracts and proposals in just a few minutes.
Start from scratch, clone an existing offer, or use one of our professional pre-built templates to create documents customized for your industry. You’ll be able to adjust fonts, images, and information to highlight your brand, adding your logo for easy recognition. Best of all, our templates are designed to sell, clinching every deal.
These clearly written contracts are legally binding and made to protect your and your work — even in court. You can avoid loopholes, scope creep, uncertainty, and more with every project.
Our terms are legally vetted to save time and effort for both parties. Everyone can sign within the Hectic app, keeping the process as quick and painless as possible. And just like that, you’ll be on your way to turning new opportunities into long-term business.
*The Hectic contract template was drafted by a professional, however, it is not a substitute for legal advice. If you have any questions regarding this contract template or your finished contract as it relates to your specific business, please contact a licensed attorney.
Understanding forms and legal documents
Along with contracts, you may need to use and/or sign other legally binding documents. Some of the common documents you may run into include:
Non-Disclosure Agreements (NDAs)
Also known as confidentiality agreements, this document is an agreement that protects any sensitive information you may learn while working with the client. The terms may vary slightly, but generally you’re agreeing to keep the information private from anyone who isn’t involved with the project.
Some businesses will ask you to sign these documents before working together. Like your contracts, these agreements outline their expectations for your working relationship and include legal protections. Read them carefully to check for surprises, but these are fairly common and straightforward.
If you make more than $600 while working for a client, they will send you this tax form before January 31st each year. The 1099 form includes the total amount they paid you, making your tax work a bit easier. You don’t have to file these forms, but it’s a good idea to hang onto them, just in case.
Making sure you get paid
You are working to make money, so guaranteeing payment is a top concern for any independent worker. Because most freelancers are fairly small operations, however, many don’t have the clout or financial resources to legally fight for unpaid invoices.
You don’t have to roll the dice with every job. Using the options below, you can create payment security and confidently deal with any payment problems you encounter.
Checks vs electronic payments
Before technology revolutionized the world, sending invoices and checks through snail mail was the only option for business transactions. Today, though, physical payments are far more trouble than they’re worth. Some of the potential issues with checks include:
- Requires excessive time to send and receive
- Less accountability and higher risk
- Checks can be stolen, lost, or made out for the wrong amount
- Adds unnecessary steps and effort to access funds
Thankfully, there are numerous ways to bill your clients and receive payments online. At Hectic, we’ve partnered with Stripe to make getting paid faster and easier for all freelancers.
Stripe is an online payment service that gives you quick access to any payments you receive, often as soon as two days after your bill is paid. Once you’ve created your invoice and added your terms, all you have to do is hit send. Clients can then use the “Click to pay” button built into the invoice to make the payment instantly.
This process guarantees correct payments and gives you a reliable way to track your invoices. With faster access to your money and secure payment processes, you can enjoy greater confidence and peace of mind.
Written payment agreements
Whether you’re creating your own contracts or working through a client-finding platform, you need to get a written agreement to your payment terms.
Milestones and deposits
Asking for a deposit helps build trust between you and the client. Each party is more invested in the project, which encourages integrity from both. In the event the client tries to get out of paying, you will at least have a small amount to show for your work.
Milestones also involve small amounts of the total cost, but they are scheduled at different points throughout the process. If you are designing a logo, for instance, you can set a milestone for the first deliverable, each round of changes, and the final delivery of relevant files. This set-up limits your risk and helps move the project forward.
When a payment is late or you’re fighting for every penny, it’s a good idea to put your work on hold. A bad client will try to get as much free work as possible while giving you excuses for non-payments. Or, it might be that your payment isn’t a priority but their work is.
Either way, stop working as soon as a payment is late. Send a reminder for the outstanding invoice and your terms. This is often enough to resolve the problem. When a client continues to delay your payment beyond this point, put the project to the side until you reach a resolution. If getting the work you’re doing is really that important, they will make your payment a priority so you can get back on track.
How to talk to clients about payment problems
Just the prospect of not getting paid is scary enough to put you on the offensive. It’s easy to react strongly and negatively to these situations. Rather than potentially damaging the relationship you’ve built, give your client the chance to explain and fix the problem. Often, it’s either a misunderstanding or simple unawareness.