Most businesses with $1 million to $5 million in revenue need seven core contracts: a customer agreement, vendor agreements, employee documents, independent contractor agreements, NDAs, an owners’ agreement, and a commercial lease. The most common gaps are missing intellectual property assignments, unclear payment and liability terms, and owners’ agreements that were never updated. Here’s what each contract should cover.
At this size, a business usually has more customers, more employees and more vendors than its original paperwork was built for. Templates from the early days often don’t match how the company actually operates now.
1. Customer agreements and terms of sale
Your customer contract is where your revenue is protected. For service businesses, that’s often a master services agreement (MSA) with statements of work (SOWs) for each project. For product businesses, it’s usually terms and conditions of sale.
What it should cover:
- Scope. What you deliver, what you don’t, and how changes get approved and priced.
- Payment terms. Due dates, late fees, deposits, and your right to pause work for nonpayment.
- Limitation of liability. A cap on damages, often tied to fees paid, and an exclusion of indirect damages.
- Warranties. What you promise, for how long, and what the customer’s remedy is.
- Termination. How either side can exit, and what happens to work in progress.
- Dispute resolution. Governing law, venue, and whether disputes go to court or arbitration.
A common problem: you send a quote, the customer sends back a purchase order with its own terms, and nobody reconciles them. For sales of goods, the Uniform Commercial Code has rules for this “battle of the forms,” and the result may not be what either side expected. Make it clear in writing which terms control.
2. Vendor and supplier agreements
Vendor contracts usually start on the vendor’s paper, so they favor the vendor. That’s normal, but read them before signing, especially for software, logistics, manufacturing and anything your operations depend on.
Watch for:
- Auto-renewal and short cancellation windows
- Price-increase rights with no cap
- Liability caps that leave you exposed if the vendor’s failure costs you a customer
- Data terms: who owns your data, how it’s protected, and how you get it back
- Indemnities that only run one way
Our article on contract red flags with vendors and customers goes deeper on these terms.
3. Employee documents
At a minimum, most growing companies need:
- Offer letters that state at-will status (where applicable), pay, classification as exempt or non-exempt, and start date
- An employee handbook with your key policies
- A confidentiality and invention assignment agreement for anyone who touches your customer lists, pricing, code, designs or processes
Include the federal whistleblower immunity notice
The Defend Trade Secrets Act gives employees immunity for certain confidential disclosures of trade secrets to the government or in court filings. Employers must include notice of that immunity in agreements that govern trade secrets or confidential information, or refer to a policy that contains it. Under 18 U.S.C. § 1833(b), an employer that skips the notice can’t recover exemplary damages or attorney fees under the Act against that employee. The statute defines “employee” to include contractors and consultants.
Non-competes and non-solicits depend on state law
The FTC’s 2024 rule banning most non-competes never took effect. A federal court in Texas set it aside in August 2024, and in September 2025 the FTC dropped its appeals and accepted the vacatur. The FTC has said it will still pursue specific non-competes case by case.
That leaves state law in charge, and it varies widely. Some states, like California, ban most employee non-competes. Others set income thresholds. Colorado, for example, limits non-competes to highly compensated workers, a threshold its labor department set at $130,014 for 2026. Many states apply a reasonableness test to duration, geography and scope. Talk to a lawyer before relying on a restrictive covenant in any state where you have employees.
4. Independent contractor agreements
Contractors are common in growing businesses: developers, designers, marketers, bookkeepers, salespeople. A written agreement should cover scope, payment, confidentiality and, most importantly, ownership.
Your company doesn’t automatically own contractor work
This is one of the most common and costly gaps. Under federal copyright law, work by a non-employee is a “work made for hire” only if it fits one of nine categories and both parties sign a written agreement saying so. According to the U.S. Copyright Office, those categories include contributions to collective works, compilations, translations and instructional texts. Software, logos and most website content usually don’t fit.
The fix is a written assignment of intellectual property rights to your company. Without it, the contractor may own the code, design or content you paid for. That often surfaces at the worst time, like during due diligence when you’re preparing your business for sale.
A contractor agreement also doesn’t decide whether someone is legally a contractor. The actual working relationship does. See our guide on employee vs. independent contractor classification.
5. Non-disclosure agreements (NDAs)
Use an NDA before sharing sensitive information with potential partners, investors, buyers or vendors. A practical NDA:
- Defines confidential information clearly, with standard exclusions
- Limits use to a stated purpose
- Sets a reasonable term, with longer protection for trade secrets
- Requires return or destruction of information on request
- Is mutual when both sides share information
Keep a simple form ready so you aren’t signing the other side’s version by default.
6. Owners’ agreements
If your company has more than one owner, the owners’ agreement may be the most important contract you have. For an LLC, that’s the operating agreement. For a corporation, it’s the bylaws plus a shareholder agreement.
It should address:
- Who makes which decisions, and what needs unanimous approval
- How and when profits are distributed
- What happens if an owner dies, becomes disabled, divorces or wants out
- How ownership is valued and paid for in a buyout
- How deadlocks get resolved
Many companies at this stage have an operating agreement they downloaded at formation and never revisited. If that sounds familiar, our operating agreement checkup walks through what to review.
7. Commercial lease
A lease is often a company’s largest fixed obligation. Before signing or renewing, review:
- Personal guaranty. Whether it’s required, capped, or burns off over time
- Operating expenses. What’s passed through to you and whether there’s a cap
- Assignment. Whether you can transfer the lease if you sell the business
- Renewal and expansion options
- Repair and maintenance obligations
Other contracts that may apply
Depending on your business, you may also need:
- Website terms of use and a privacy policy, especially if you collect personal data online. State privacy laws apply based on thresholds that vary by state.
- Sales representative or referral agreements, with clear commission terms
- Licensing agreements if you license your brand or technology
- Loan documents and personal guaranties from your bank
Signing and storing contracts
The federal ESIGN Act generally provides that a contract can’t be denied legal effect solely because it’s electronic. E-signature tools are fine for most business agreements. A few document types are excluded, and some states add requirements.
Two habits help more than any template:
- Keep a contract register. Track each agreement’s parties, term, renewal date, notice deadline and key obligations.
- Confirm who’s signing. Sign in the company’s name, with your title, so you don’t sign personally by accident.
How a subscription handles contract work
Contract work is a natural fit for a monthly legal subscription. Most contracts take a few hours to draft or review, and the work comes up regularly. With our subscription, $1,997 a month covers up to 5 attorney hours, and additional time is $550 an hour. We ask before going past the 5 hours. You can see how the subscription is priced, or start your subscription and send us your current templates to review.
Frequently asked questions
What contracts does a small business need first?
Start with the contracts that touch revenue and ownership: your customer agreement or terms, your owners’ agreement (operating agreement or shareholder agreement), and employee and contractor agreements that assign intellectual property to the company. Vendor contracts, NDAs and your lease come next.
Does my company own work created by an independent contractor?
Not automatically. Under federal copyright law, a contractor’s work is a work made for hire only if it falls into one of nine specific categories and both parties sign a written agreement saying so. For most work, like software, designs or marketing content, you need a written assignment of rights.
Are non-compete agreements still enforceable?
It depends on the state. The FTC’s 2024 nationwide non-compete rule was set aside by a federal court, and the FTC dropped its appeals in September 2025. State law now controls, and it varies widely, from outright bans to salary thresholds to reasonableness tests.
Are electronic signatures valid for business contracts?
Generally, yes. The federal ESIGN Act provides that a signature or contract can’t be denied legal effect just because it is electronic. Some documents, such as wills and certain notices, are excluded, and state rules can add requirements.
How often should we review our standard contracts?
A yearly review is a reasonable baseline. Review sooner when you enter a new state, launch a new product line, raise prices, change how you deliver services, or when a law affecting your contracts changes.