The Five Contracts You Need Before Your First Sale

Every business needs the same five agreements before it accepts its first dollar. Get these in place once, and 95% of the legal questions that come up later are already answered.

1. Client / Service Agreement

The single most important contract you will ever sign. It defines scope, deliverables, timelines, payment terms, ownership of work product, and what happens when either party wants to end the relationship. Without it, every dispute becomes a 'he said / she said' that ends in lost revenue or worse.

2. Independent Contractor Agreement

The moment you hire your first freelancer — designer, developer, virtual assistant — you need this. Beyond payment terms, it has to cover: work-for-hire language (so the IP belongs to you), confidentiality, and a clear statement that they are NOT an employee. The misclassification penalties from the IRS and your state Department of Labor are brutal.

3. NDA (Mutual)

Use the mutual version, not the one-way version. Vendors, prospective hires, potential partners — anyone who sees your customer list, your pricing model, or your internal processes signs this first. Mutual NDAs get signed faster because the other side knows their information is also protected.

4. Privacy Policy

Required by law if you collect any personal information through a website — which includes email signups and contact forms. California's CCPA and several other state laws have teeth in 2026. A boilerplate policy generated through your platform is fine for most early businesses, but it has to actually match what you do with data.

5. Terms of Service

The terms a customer agrees to by purchasing or using your product. Liability limits, refund policy, dispute resolution (most owners should include a mandatory arbitration clause), and choice-of-law. This is the contract that stops a $200 customer from being able to sue you for $200,000.