New entrepreneurs can get intimidated by the idea of using contracts. You may have lots of questions, one of which is: Do you need one?

The simple answer is YES.

You need to make use of contracts in business. Contracts may seem too complex, however, they are an essential tool for protecting and running your company.

Check out our list of reasons why a contract is important for your business:

A Contract Accounts for Each Party

When you have a contract, every party understands the agreement. It represents the business relationship through a written, visual, and legally binding statement. A contract will not only protect but also benefit both parties. It holds each party accountable for what they have agreed upon.

All Terms are Written Out

A contract spells out expectations, costs, terms, and conditions. It leaves nothing to chance. A good contract will also have an audit trail of every comment or edit made over time. No matter what, the contract will always ensure both sides are getting the best deal or have a mutually successful outcome.

Related Post: What is an Accountable Plan?

A Contract is a Tool for Resolving Issues

If a party disagrees, your contract is the instrument to use for resolution. A contract can mitigate risk and prevent conflict if the agreement covers all bases. Along with making sure the contract has the terms clearly written out, your agreement should maintain compliance for both parties. Therefore, each party should make sure the contract is approved by a lawyer.

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