Being a self-employed freelancer usually means you’re wearing so many hats that it can be easy to skip something. Forgetting to share a social media post or pushing back a self-imposed deadline might seem harmless, but there are other more critical things that shouldn’t be overlooked.

For some freelancers, creating contracts of work can be one of those things you keep high on your priority list and share with every client you have. After all, a well-drafted freelance contract can often support smooth working relationships, align expectations and protect your business in case any issues arise.

We share our tips and tricks on what a freelance contract is, what it should contain and why it’s so important, including agreeing on deadlines, payment dates and legal terms and conditions.
 

What is a freelance contract?

You’ll normally draw up a freelance contract when you start working with a new client. It’s a legally binding document that details the terms and conditions of the project or the working arrangement.

In a similar way to an employment contract, a freelance contract outlines important information and agreements made with a client so that everybody involved is, quite literally, on the same page.

Your freelancing contract might not need to look like a long and wordy document, and could instead be something as straightforward as an email agreement which outlines what work will be undertaken, timeframes, and costs.

Both the freelancer and the client should digest and sign the contract before working together on a new project or if there are any changes to an existing setup. Each party should have a copy of the contract stored somewhere securely for the duration of the project and after.
 

Why are contracts important for freelancers?

Although freelance contracts are legally binding, they aren’t legally obligated. In other words, you won’t get in trouble with anybody if you work without contracts in place, providing everything runs smoothly. But if any problems arise with a project or a client, you might regret not covering yourself with a contract.

The benefits of a carefully crafted freelance contract include:

• Providing clarity for both parties on what is expected in terms of things like scope of work and deadlines
• Providing legal protection for both parties in case of any problems
• Helping to ensure you get paid on time and in full, by setting out expectations
• Protecting your Intellectual Property (IP) so your work can’t be used unlawfully or without payment
• Creating and maintaining a professional impression
• Supporting the tricky process of cutting ties with a client if this situation should arise

What should be included in a freelance contract?

Hopefully the benefits of freelance contracts are now clear. The next thing to clarify is what you need to include in a freelance contract to really reap the rewards of having one. The document needs all of the key elements in order for it to be a valuable and functional tool.

Below are the key points a freelance contract should include, whether you’re creating one from scratch or looking to update your existing document.
 

Personal details

Before you get stuck into laying out all the other information in your contract, start by providing the following information about you, such as:

• Full name
• Business name and address
• Website, if applicable
• Email address
• Contact details

Scope of the project

The first clause you should create in the main part of your contract is the scope of the project and the agreed deliverables. In other words – what are you doing for the client? Don’t be afraid to get specific here – the more detail you go into, the less chance there is of misunderstandings between you and your client.

If possible, itemise the parts of the project you plan to undertake and deliver and give a rough time estimate for each. Not only will this help manage expectations, but the client will also appreciate being able to see where and how their budget is being spent.
 

Rates and payment terms

The rates and payment sections are arguably the most important part of a freelance contract because it outlines how, when and how much the client has agreed to pay you for your services.

This section of the contract should include details about:

• The agreed rates you are charging by day, hour, flat fee, etc.
• Your preferred payment method and payment details
• Payment terms (typically 30 days), which should match your invoice document, and the details of any late payment fees you might charge
• Whether or not you plan to take a portion of the fee upfront or in installments
• Whether or not the agreed cost includes amends or changes. If not, include information about the additional charges for this.

Agreed deadlines, milestones and timeline

Prior to signing the contract, you will already have had a conversation with the client about the desired timeline and your availability. So, when writing the contract, include what you agreed in a clause about deadlines and planned milestones. You should also provide a date for when work officially commences.

It’s worth adding a line about flexibility around delivery deadlines in this clause. You never know what the future holds, and you may need a certain amount of slack. Committing to a specific date, unless the client really needs you to, too far in advance can cause problems further down the line.
 

Cancellation terms

In some rare cases, a client may decide to cancel the project before the full scope of work is complete. A cancellation terms clause in your contract will ensure you’re still paid and not left out of pocket.

The cancellation form should clearly state what your ‘kill fee’ is, which is the amount the client will have to pay on top of what they owe so far for cancelling the project midway.

In this section, you should also include details about what will happen if you need to cancel the project or if you can’t complete it due to unforeseen circumstances.
 

Information regarding your IP

If you have any details about your Intellectual Property (IP) terms, you should share these in your contract. It will help make sure your work is being used how you want it to be and will also prevent clients from being able to use your work without paying for it first.

Normally, the freelancer retains the rights to work until the client’s bill has been settled. After that, you won’t be able to use or resell the same work to any other client. It would be worth noting this so the client knows you have considered ownership.
 

Dated signatures from all parties

To seal the deal, both you, your client(s) and anybody else involved should print and sign the document, e-sign in, or send email confirmation. You will need this for the contract to be officially legally binding.
 

Staying IR35 compliant

When creating your contract, you should make clear that you’re working in a freelance capacity. This needs to be obvious so you don’t look like you’re an employee in disguise, which would trigger the IR35 rules.
 

What is an employee in disguise?

An employee in disguise is a contractor (or freelancer) who has been hired on a self-employed basis, but the nature of the working arrangement is more like permanent employment. This is what IR35 rules and regulations are designed to clamp down on.

Disguised employment occurs because employers hire contractors and brief them to work like permanent employees but pay them invoices rather than through payroll. This means the employer gets to avoid paying National Insurance and other contributions and employee benefits.

Non-compliance can sometimes be the result of an honest lack of awareness, but failing to comply with IR35 rules runs the risk of hefty financial penalties so it’s important to ensure you’re ticking all the right boxes.
 

What to include in your freelance contract

If your relationship with a client is authentically in a freelance capacity and you are operating as an autonomous self-employed contractor, you are what’s referred to as being ‘outside IR35’.

Demonstrate your ‘outside IR35’ status on your contract by detailing your freelance working processes and working arrangements with your client. This will show HMRC that you are indeed a freelancer and not an employee – or a disguised employee.

 
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