Contracts & Legal
Service Agreement vs Contract: What Small Businesses Need
Short answer
For most small service jobs, a signed estimate with clear scope, price, and payment terms is a binding contract. Use a longer service agreement for recurring work, high-dollar jobs, or anything involving subcontractors.
Owners often ask whether they "need a contract" for a $2,000 kitchen repair. The honest answer: you already have one every time a customer signs your estimate. The question is whether it protects you.
The three documents you'll actually use
| Document | When to use it |
|---|---|
| Signed estimate | One-off jobs under ~$10k with a clear scope |
| Service agreement | Recurring work (cleaning, lawn, IT support) or ongoing MSA |
| Work order / change order | Adds, changes, or removes scope inside an active job |
What every service contract must include
Missing any of these and you have an argument, not an agreement:
- Parties — full legal names and addresses of both sides
- Scope — exactly what you will and will not do, in plain language
- Price — flat, hourly, or a not-to-exceed number with unit rates
- Payment terms — deposit, milestones, net terms, late fees
- Change orders — how scope changes get approved and priced
- Warranty — what you stand behind and for how long
- Termination — how either side can walk away
- Signatures — both parties, dated, ideally e-signed
Deposits, retainers, and progress payments
Requiring a deposit is not aggressive — it's normal. It filters out tire-kickers, funds materials, and protects you if the customer disappears after you've started.
For jobs under $2,000, a 25–50% deposit at signing and the balance on completion is standard. For larger jobs, use milestones: 30% at signing, 30% on rough-in, 30% on completion, and 10% held for punch list.
Electronic signatures are legally valid
The E-SIGN Act (US), UETA (state), and equivalents in the UK, EU, Canada, and Australia treat a checkbox or drawn signature on a screen as equal to ink on paper. Save the audit trail (IP address, timestamp, email) and you're covered.
Glo Invoice captures a customer signature on every estimate and stores the audit trail automatically.
Frequently asked questions
Do I need a lawyer to draft my service agreement?
For your first template, yes — pay a small-business attorney $300–$800 for a one-time review. After that, reuse the template for every job and only involve counsel for six-figure or unusual work.
What if the customer refuses to sign?
Don't start the work. If they won't sign a one-page estimate that says what they're buying, they will also fight the invoice. Walk away — the job is not worth what it will cost you to collect.
Are text messages a contract?
In most US states, yes — courts have upheld SMS agreements when the terms are clear and both parties acted on them. But it's a bad way to run a business. Send a signed estimate.
Run the whole job in one app.
Signed estimates, invoices, payments, and customer records — Glo Invoice keeps the paperwork side of the business quiet so you can work.