Protect Your Small Business with Consulting Agreements Before Hiring, by Elizabeth A. Brown, Esq
When small businesses start to grow they frequently find themselves needing to hire consultants and independent contractors to help them expand their business. This can be an exciting and potentially lucrative undertaking for a business. But, before you get caught up in the excitement, make sure you have all of the bases covered. We have seen the fallout that can occur when inadequate structuring consulting agreements are executed, or worse, when there is no written contract at all between the business and the consultant or contractor. Before bringing a consultant or contractor on board, small business should make sure they have a solid consulting agreement in place to protect both the business and the consultant.
Some of the key things that need to be included in consulting agreements are:
- Employee/Independent Contractor: Determination of whether the consultant/contractor is going to be an employee or an independent contractor. There are distinct differences between the two and serious ramifications for a small business if they mis-characterize the consultant/contractor as an independent contractor when they are, in fact, an employee of the business.
- Non-Compete and Non-Disclosure Provisions: It is likely that a small business may want the to restrict the consultant/contractor’s ability to compete with the business in the future and require that the consultant/contractor maintain the confidential information of the business. Under New Hampshire law, in order to be enforceable, an employee must be made aware of the non-compete provisions before the offer of employment or engagement is accepted or the employer must offer other consideration.
- Project Timelines and Deadlines: Project timelines are particularly important to prevent misunderstandings between a business and its consultants. While the dates a project will begin and end are obviously essential, consulting agreements /contracts should also include deadlines for important milestones.
- Duties/Responsibilities: If a consultant or contractor is being retained for a specific project or to complete specific tasks, the consulting agreement should make a detailed listing of those tasks and responsibilities and ramifications if those obligations are not fulfilled. A simple checklist can be helpful to make sure that both parties are clear and fully aware of what is expected.
- Compensation: Of course all consultants/contractors will want to be compensated for the work that is performed. The contract should make sure that it clearly sets forth how the consultant will be paid and any bonuses, etc. that the consultant may be entitled to.
Avoid Future Conflicts with Consulting Agreements for Small Business
The specifics of what should be included in a consulting agreement will differ depending on the individual facts and circumstances. This is not an area that a small business ought to try to tackle without the assistance of a legal expert or with online forms. We are experienced in drafting consulting and employment agreements and are here to assist you in helping expand your business. The time spent up front will protect your business in the future and avoid the risk of future lost productivity due to conflicts with consultants or avoidable competition from a trusted employee.