Many people feel a pang of anxiety when they consider signing a contract. Business contracts are a necessary part of doing business, however, if you want to protect yourself and your assets.

Here are seven business agreements you need to familiarize yourself with if you own a small business.

1. Partnership Agreement    

You need a partnership agreement even if you’re starting or operating a business with your best friend. Effective partnership agreements contain details about who contributes what, including how much money is contributed; payment distributions; day-to-day duties; how decisions between partners are made; and expense responsibilities. And it outlines what happens when a partnership is dissolved due to death, illness, bankruptcy, retirement or resignation.

2. Nondisclosure/Confidentiality Agreement

Protecting your proprietary information is vital. Any time you work with someone, be it a vendor, employee or investor — anyone who has access to your customer lists, financials, ideas or concepts — you should require them to sign a Confidentiality Agreement or Nondisclosure Agreement (NDA). The agreement should designate how long the obligation lasts, its limitations and penalties for failure to comply.

3. Employment Offer Letters

Employment offer letters are used to outline the details of a job offer. The letter should include job title, responsibilities, compensation, benefits, an “at-will” clause and include an NDA. The letter should be signed by both the prospective employee and company representative.

4. Independent Contractor Agreement

Hiring independent contractors for specific jobs is a great way to get the work done and fill a specific need without hiring an employee or worrying about taxes, perks and benefits. But the IRS is strict with the independent contractor designation.

A contract protects both you and the contractor in case of audit. For that reason, the independent contractor agreement should define the relationship clearly. It should state that the contractor is an independent entity responsible for paying taxes. Job duties are not specifically outlined in a contractor agreement.

5. Website Terms of Use Agreement

You’ve probably noticed that most corporate websites have a terms of use agreement. It might seem like a bunch of legal mumbo jumbo, but if you have a website, you need to have one.

The agreement protects you from legal liability. Items covered include usage limitations; your privacy policy; how you use customer information; liability limitations; copyright warning protection; disclaimers; and methods of handling disputes. It also includes the location (typically your city and state) where dispute proceedings are conducted.

6. Service Contracts

If your businesses provides services, you need to have a standard Service Contract or Professional Service Agreement.

A service contract between you and the customer details the conditions and terms of the service and outlines the exact duties to be performed. Covered subjects include timetables and customer payment requirements.

It should also set liability limitations to agreed upon service fees so you can’t be held responsible for additional liabilities.

In addition, include a paragraph that explains what happens if you default or don’t meet deadlines as well as what happens if the customer does not provide you with necessary information or material when required.

7. Sales Contracts

If you sell products, you need a Sales Contract. Key terms include price, discounts if applicable, warranty information, taxes, payment details, disclaimers and liability limitations.