How to write a service contract for freelance and small business work

Step-by-step

1

Use a reputable template, don't draft from scratch

Most freelance and small business contracts cover the same ground — there's no need to draft from blank paper. Good template sources: Bonsai (free templates with platform), AND.CO (free), HelloBonsai's library, contract templates from your country's national freelancers' federation (IPSE in UK, Freelancers Union in US), industry-specific templates (Graphic Artists Guild for designers, etc.). Customise the template for your specific business, but the structure and standard clauses should come from a vetted source. Drafting from scratch creates gaps and bad wording.

2

Cover the basic structure clearly

Standard structure for a freelance service contract. Parties (your business and the client). Scope of work (specific deliverables, what's included and what's not). Timeline (start date, milestones, completion date). Pricing and payment terms (amount, deposit, payment schedule, late fees). Revisions (how many rounds included, how additional revisions are billed). Cancellation policy (notice required, deposits forfeit). IP and ownership (who owns the final work after payment). Confidentiality (each side protects the other's information). Liability and indemnity (cap on damages). Jurisdiction (which country's law applies if there's a dispute). Each section should be 2–4 sentences — long contracts intimidate clients without adding protection.

3

Define scope ruthlessly

Scope creep is the biggest cause of unhappy projects. Define scope in specifics: 'Three logo concepts presented, one selected for development, two rounds of revision, delivered as vector files and PNG exports' beats 'logo design'. List what's NOT included explicitly: 'Brand guidelines, business card design, social media templates not included'. If a client asks for out-of-scope work, you have written grounds to charge for it. Vague scope leads to vague disputes; specific scope leads to clear billing.

4

Set clear payment terms

Standard freelance payment structure: deposit upfront (30–50% for projects under £5k, sometimes more for larger), milestone payments tied to specific deliverables for longer projects, final payment on completion before final files are released. State payment due dates concretely ('Due within 14 days of invoice') not just 'Net 14'. Include late payment terms (UK Late Payment of Commercial Debts Act gives you 8% above BoE base plus £40 admin fee automatic). Include payment methods (bank transfer, Stripe link, etc.).

5

Cover cancellation properly

Specify what happens if either side cancels. Standard approach: deposits are non-refundable (covers the work done so far and the time blocked off). For longer projects, a kill fee clause specifies what's payable if cancelled mid-project — typically the percentage of work completed plus an admin fee. For retainers, require X days' notice for cancellation. Cancellation clauses protect cash flow when projects fall through, which they sometimes do.

6

Handle IP and ownership clearly

Default in most jurisdictions: until paid in full, you retain copyright in your work. State this explicitly: 'All intellectual property in the deliverables remains with [your business] until full payment is received, at which point ownership transfers to the Client'. For some businesses, you keep a portfolio/marketing licence even after transfer: 'The Service Provider retains the right to display the deliverables in their portfolio and marketing materials'. For others (especially design and creative work), specify whether source files transfer or only final exports.

7

Get it signed before starting work

Signed contracts are not optional. Even friendly relationships need them — disputes happen with friends as often as strangers. Modern e-signature tools (DocuSign, HelloSign, Adobe Sign, Bonsai's built-in) take 5 minutes to send and clients are used to signing online. Never start work without a signed contract AND deposit received. Clients who refuse to sign or pay a deposit are the clients who'll later refuse to pay invoices.

Common questions