You’re a small business owner looking to hire another individual or company to help grow your business, but wait, hiring an employee is too troublesome. You want someone professional help… and for a short time only. You do not wish to pay super or tax.

If this sounds like you, it appears that you’re seeking advice for completion of a project from an outside source. For example, you want to hire a contractor to help with data analysis, or the critique of a consultant on your HR strategies.

In both scenarios, a services agreement and a consultancy agreement can be the first step to assistance. But what’s the difference?

Service Agreement and Consultancy Agreement – What’s the Difference?

What Is A Services Agreement?

As the name suggests, a services agreement sets out the corresponding rights and obligations between two parties who either receive the benefit of the services or provide performance of the services. It is commonly used between an employer and an independent contractor.

Services typically engaged between service providers and employers include delivery and transportation, accounting, cleaning, data analysis, consultancy, construction, advertising and insurance.

It is best to have a written services agreement to help clarify and prevent potential disputes developing between you and the service provider. LawPath recommends that you draft the agreement with the guidance of an experienced business lawyer to ensure that all essential terms and conditions are included.

With LawPath, you can customise a number of services agreements on our website, and have them reviewed by an experienced business lawyer:

What Is A Consultancy Agreement?

You may have noticed already that consulting is a type of service. So, put simply, a consultancy agreement is a type of services agreement, specifically tailored between an outside consultant who provides business strategy advice to a client (the business owner).

A consultant helps to evaluate the strengths and weaknesses in your business and works with the goal of improving your processes and branding. They have specialised experience in a particular area for example human resources, value creation, customer relationships, marketing, risk minimisation, informational technology and business strategy.

Again, LawPath provides a free consultancy agreement template for you to customise before engaging in the services of a consultant.

What To Include?

It is crucial that your services or consultancy contract covers a number of terms to facilitate a smooth relationship between both parties throughout the duration of the work.

The following should be included as part of your agreement:

  • Clear rights and obligations of both parties;
  • Non-disclosure agreement;
  • Liability clauses;
  • Duration of the contract; and
  • Payment descriptions.

Benefits of Hiring Service Providers

There are multiple reasons for seeking the work of consultants and other contractors, to help your business improve and grow.

Some of the key benefits to hiring consultants or other service providers are:

  • Outside perspective and analysis – Particularly in situations where you wish to improve an aspect of your business, an independent opinion can be constructively critical. A consultant can help guide you to the direction for success;
  • Specialised knowledge – A consultant can provide more in depth insights into a specific problematic area. A contractor can use their technical and practised skills to actively help your business grow;
  • Cost savings – As an employer, you have an obligation to pay for added employment benefits, such as superannuation to an employee. For both independent contractors and outside consultants these are not required;
  • Flexibility – The term of work designated to a consultants and contractors is usually for a fixed period only and there are no long-term obligations after your contracts expire.

Final Note

Engaging in the services of an outside contractor can be extremely beneficial to your business. There is increased flexibility in gaining an outsider’s perspective/work for a short period of time (as desired) in their area of specialisation.

With a well drafted services or consultancy agreement, your business can be taking a major step forward to success!

Looking to draft a services or consultancy agreement? Contact a LawPath consultant on 1800LAWPATH to learn more about customising an agreement, obtain a fixed-fee quote from our network of 600+ expert lawyers or to get answers to your legal questions.

Carmen Zhu

Carmen is a Paralegal working in our content team which aims to provide free legal guides to facilitate public access to legal resources. With an interest in consumer and professional negligence law, her primary focus is on the importance of expanding legal awareness to business longevity.