Want to know a quick way to sink your business? It’s easy: stop putting everything in writing.
Rent an office from someone who doesn’t “do” lease agreements. Pay your taxes with as little information from tax forms as possible. Operate your business like an LLC, but don’t actually register as an LLC.
That should put you under pretty quickly.
Of course, you haven’t come to this site looking for ways to sink your business – you want that business to swim, and swim well. That’s why putting your operations in writing as often as possible will help protect you against fraud, waste, taxes – and any other obstacle your business encounters along the way. With that in mind, let’s take a look at how you can put all of your business down in writing with five corporate contracts you should never be without.
1. Independent Contractor Agreement
Running a business is not too different from running your home. And at home, you sometimes have to hire contractors to do business you’re not capable of doing.
This is a frequent theme in corporate life, as well, particularly if you run a small business that doesn’t have enough employees to handle everything it can. Independent contractor agreements are a great way to you commit your working relationship with a contractor or freelancer in writing. This helps ensure that your contractors are just as bound to complete their work as your employees are.
2. Employment Offer Letter and Termination Letters
Although preventing corporate turnover should always be a priority, any successful business is going to have its fair share of hirings and firings. Employment offer letters and termination letters are crucial to putting these decisions down in writing.
An employment offer letter, for example, can prevent one employee from asking for a 15% raise because he was “promised that.” If that promise is not in the offer letter, that employee is out of luck.
This isn’t about going after your employees and severing their rights – it’s about protecting your own. You want to make sure you commit everything that the employee will be expected to accomplish to paper so you can justify firing the bad ones. And, of course, when it does come time to fire the bad ones, make sure you put that in writing, as well.
3. Commercial Lease
Many businesses spend more on their commercial lease than they do on advertisements – and maybe even some workers’ salaries. That’s why ensuring a solid agreement through a commercial lease contract is a necessity. If the property manager you’re renting commercial space from doesn’t insist on you signing a commercial lease, you know that something’s wrong.
Of course, most landlords will have leases because they want to protect themselves. That’s why it will be important to review this commercial lease thoroughly – you want to know everything you’re committing your company to and how long that commitment lasts. Make sure you have your own copy of the lease to review from time to time, as well.
4. Tax Forms
As the old saying goes, the only two certainties in life are death and taxes. There’s nothing you can do to avoid death, of course, but you can avoid as much tax trouble as possible by ensuring all of your tax forms are in order. Are you paying all of your payroll taxes on time? Are you filing your quarterly estimates? Having all of these tax forms handy will ensure smooth tax payments – and, even better, keep the IRS agents away.
Do tax forms really fall under the umbrella term “corporate contracts”? Maybe not – but any citizen or business does have an implied contract with their respective government. Tax forms are essentially your contracts with the state and federal government – like it or not.
5. Operating Agreements
When a business starts, it generally uses a written operating agreement to formalize its structure. For example, setting up an LLC for a law firm will require that you have just such an operating agreement in place, and that this agreement is registered with the state you practice in. Without operating agreements, you attract the attention of the regulators in power and look much less like a legitimate business.
Having a foundational structure for your business is just smart strategy anyway, so be sure that your operating agreement as filed with your state meets all requirements for your business type and that the operating agreement is always accurate and updated. You’ll be surprised just how much trouble this can save you in the long run.