4 Essential Contracts for Pennsylvania Small Businesses

Starting a new business can feel overwhelming.  There are so many items on your business plan to implement before you even open for business. Unfortunately, for a variety of reasons – such as cost, lack of awareness, or lack of time – owners often overlook contracts until after a problem arises.   While we can’t list every contract your business will need, here are four essential contracts for Pennsylvania small businesses that will increase your success as an entrepreneur.

Commercial Lease

You probably spent weeks or months scouting out the perfect location for your enterprise.  When you finally found the perfect spot, you were overjoyed!  Then came the not-so-fun part; negotiating your commercial lease.

You need a commercial lease if you rent the space your business occupies.  Here are some very important items to pay attention to:

  • How long you are bound to rent the space?
  • How you can terminate the lease? How the landlord can terminate the lease?
  • Who is responsible for repairs?
  • What utilities are you responsible for?  What utilities does the landlord provide?
  • Can you sublet the space?
  • Are there any local zoning, parking, or signage restrictions that will negatively affect your business?

Do not simply agree to the lease the Landlord provides without carefully reading it.  You should have an attorney review the lease if the rent is a substantial proportion of your operating expenses or for a duration of longer than one year.

Operating Agreement

Many first-time entrepreneurs do not bother with making a contract that spells out the nature of their businesses.  This can be a recipe for disaster later, especially if you have business partners.  A solid operating agreement for your corporation, LLC, or partnership will spell out important information that is necessary to smoothly operate your business.

For more detailed information, including the importance of this type of agreement, read this article:  Why You Need Shareholder, LLC, and Partnership Agreements.

Website Terms of Use and Privacy Policies

A well-maintained website is an important part of a successful business strategy.  Many companies (especially during these uncertain times) are focused on e-commerce.  Websites in general, but especially e-commerce sites, must comply with several state and national laws.

If you plan on allowing customers to purchase goods from your website, you need an agreement that lets users know what you are allowed to do with their private information.  Similarly, if users can register for an account on your site or post information to your site, you need to inform the users of how you collect and use their information.   For more detailed information, read this post: Does My Website Need A Privacy Policy?.

Employee and Independent Contractor Agreements.

Employees.  Even though most employees are at-will employees (meaning you can fire them for any lawful reason), you should create an agreement with the employee through a one-page offer letter.  The offer letter should be signed by you and the employee.  It should state the essential terms of employment.  These are job title, duties, starting date, rate of pay,  and the days and hours the employee is expected to work.  In addition, if you specifically state the individual is employed “at-will”.

Independent Contractors.  Many small businesses often begin with independent contractors, such as for outsourcing specialized tasks (i.e. IT services, web design, marketing).  Any business using independent contractors needs a written agreement identifying the specific duties of the contractor, the length of time the contractor will perform the services, a notice that the contractor will be responsible for reporting the income as self-employment or business income and not as wages.

Employee versus independent contractor determinations are tricky.  You should consult an attorney knowledgable in this area before deciding an individual is an independent contractor.  For more information on this topic, see my post here: Independent Contractor or Employee?

Conclusion

Again, this is not meant to be an exhaustive list of the contracts you need for your company.  For comprehensive business law guidance from an experienced, friendly, and non-intimidating attorney, contact Concerto Law at (814) 706-1288.