For certain tasks and projects at your business, it may make sense to find a contractor to get the job done. Follow these common-sense guidelines to get the most value out of the experience.
1. Use a Contract
Every time you work with a contractor, use a written contract that both you (or a representative of your business) and the contractor sign. Using a written contract protects you both from misunderstandings based on verbal agreements or casual exchanges via email or phone.
A contract should cover the scope of the work, the estimate or budget agreed upon, and the terms of the work, such as who has rights to the finished product or what will happen if the work is not satisfactory. Many contractors have their own agreements and forms that they use regularly; feel free to offer your own, however, or ask for changes to the contract so it covers everything you want it to. Yes, you’ll want the terms to be favorable to your business, but be sure to keep the agreement fair for the contractor to avoid prolonged negotiation before signing.
2. Choose a Contract Type
Some contracts are based on project deliverables, while others are based on time spent. When deciding which works best for you, you’ll want to consider the scope of work and whether you’re engaging the contractor for a one-time project or a task that needs ongoing maintenance. If you choose to base payment on a deliverable, pay close attention to the scope at the start; likely, any work you want done that’s outside the original plan will cost extra. If you choose to pay by the hour or the day, monitor the billing in order to understand the overall cost of the project. The risk here is that the budget may be unpredictable if there isn’t a set deliverable.
3. Make Payments
Many contractors ask for an initial payment before work begins; that guarantees your interest in the project, so they’re not taking a risk by putting their hours in on the work. Depending on the scope of the work, you might also want to set up payments per phase of the project. If the project will be a high-cost one, or extend over several months, ask to set up a payment schedule that keeps you from facing one gigantic bill at the end of the project. If you’re asking for detailed proposals before signing on, consider offering a stipend to cover the pre-work.
4. Keep Records
Maintaining thorough records when working with a contractor is good business sense. Print and file (or digitally file) a copy of your contract(s) and, if applicable, any email conversations regarding the scope and nature of the work. Keep copies of checks or receipts of any digital payments made to the contractor.
Having these records allows you to look back and estimate the timeline and budgets for similar projects or tasks in the future. It also gives you thorough documentation in case of any disagreement with your contractor, and provides proof of contractual work in case the IRS ever questions whether your contractor was actually an employee.
5. Communicate, Communicate
When you work with employees, they get to know your preferences, your methods, and your go-to standards for different types of work. Contractors are a different story: they’re independent, self-employed people—really, they’re small business owners, too—and you are one of many clients whom they assist. In other words, don’t expect them to read your mind; you’ll both end up frustrated.
Instead, be very specific about what you want in terms of the work they’ll do for you. Ask questions if you’re unsure about anything. And communicate regularly throughout the project or task; ask for updates, and be quick to let them know if you’ve changed your mind on something. Contractors want to do satisfactory work and have happy clients. The better you are at communicating your needs, the better they can be at producing what will benefit your business.
6. Recommend and Refer
When you find contractors you love working with, be sure to let them know. Recommend great contractors to other small business owners; it’s the equivalent of your customers recommending your business to their friends and family. And when you need a different type of contract work, reach out to your favorite contractors for referrals; they might be able to provide recommendations from within their network.
Working with a contractor may seem a little complicated, if it’s new to you. Done right, however, it’s a simple, clear-cut business relationship that can greatly benefit your company and reduce your workload.
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