Every Contract Your Small Business Needs (2025)
Running a small business without proper contracts is like driving without insurance — fine until something goes wrong. Here is every contract you should have in place.
Last updated: February 2025
Employment and People Contracts
If you have anyone working for you — employees, contractors, or freelancers — you need contracts governing those relationships. The type of contract depends on the legal status of the worker, which determines their rights and your obligations.
- Employment contracts: legally required for all employees and workers from day one
- Freelancer and contractor agreements: essential for self-employed workers to establish IR35 status
- NDAs and confidentiality agreements: for anyone with access to sensitive business information
- Consultancy agreements: for ongoing advisory relationships with specialists
Commercial and Client Contracts
Your commercial contracts protect your revenue, define your obligations, and set the terms for every business relationship. Without them, you rely on implied terms and goodwill — which rarely survive a dispute.
- Terms of business: your default legal terms for all client relationships
- Service agreements: detailed contracts for significant or ongoing client engagements
- Sales contracts: for selling goods, including title retention and warranty terms
- Supply agreements: for your relationships with suppliers, covering quality, delivery, and payment
Operational and Protective Contracts
Beyond people and clients, your business needs contracts that protect its assets, manage its premises, and govern its internal operations. These are often overlooked until a problem arises.
- NDAs: for protecting confidential information in any business context
- Partnership or shareholders' agreements: if you have business partners or co-founders
- Licensing agreements: if you use or license intellectual property
- SLAs: if you provide or depend on services with measurable performance standards
Key Takeaways
- Every business with employees or contractors needs compliant written agreements from day one of each engagement.
- Commercial contracts — terms of business, service agreements, and sales contracts — protect your revenue and define your obligations.
- Protective contracts like NDAs, partnership agreements, and SLAs are essential for safeguarding your business assets and relationships.
Frequently Asked Questions
What is the most important contract for a new small business?
Your terms of business are the most important starting point because they apply to every client relationship. They set your payment terms, limit your liability, and define the legal framework for your services. Once you hire anyone, employment contracts become equally critical as they are a legal requirement.
How much does it cost to get business contracts drafted?
Solicitor-drafted contracts typically cost £500 to £2,000 per document for a small business. Template services and online platforms offer lower-cost alternatives from £50 to £200 per template. For critical contracts like partnership agreements or high-value commercial deals, professional legal advice is worth the investment.
Can I use free contract templates from the internet?
Free templates can be a starting point but come with significant risks. They may not comply with current UK law, may be designed for a different jurisdiction, or may lack clauses important for your specific situation. At minimum, have any free template reviewed by a solicitor before relying on it for important business relationships.
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