What Should a Small Business Service Agreement Include?

By Bill Stilwell · Last reviewed October 17, 2026

The short answer

A service agreement is the written contract between you and your customer. It names both parties, describes the work, sets out who is responsible for what, states the price and payment terms, and explains how changes, cancellations, disputes, and customer data are handled. Have an attorney write or review your template, then get it signed or accepted before work starts.

What this means

A good agreement defines the relationship, the work, each side’s responsibilities, payment, and the steps for disputes. Here’s what each part does.

16.5.1 Parties

Name the business exactly as registered, including the ending, like limited liability company (LLC) or Inc., and the customer’s full name and contact details. Use your legal name, and add your trade name if you use one (see 8.1.1 Legal Name and 8.1.2 DBA or Trade Name). A contract signed in your personal name can make you personally responsible.

16.5.2 Services or products

Describe what you’ll supply. For bigger jobs, attach a detailed scope of work and refer to it (see 11.1.4 Scope of Work).

16.5.3 Responsibilities

List what each side must do. For example, the customer provides access, moves furniture, or sends logins and photos by a date. You provide licensed staff, clean up, or deliver by a date.

16.5.4 Payment terms

State the price, deposit, due dates, accepted payment methods, taxes, any late fees, and what happens if payment is late. Check your state’s rules on late fees and deposits (see 11.1.6 Payment Terms).

16.5.5 Changes

Say that changes to scope, price, or schedule need written approval before the work is done (see 11.1.5 Change Order).

16.5.6 Cancellation

Explain how either side can cancel and what charges apply. Federal rules can give customers cancellation rights. Under the Federal Trade Commission (FTC) Cooling-Off Rule, many sales of $25 or more made at the buyer’s home, or $130 or more at a temporary location, can be canceled until midnight of the third business day. The seller must give notice of that right and cancellation forms. There are exceptions, including work on the property that the customer asked for. Check your state’s rules too (see 11.1.7 Cancellation Policy).

16.5.7 Disputes

State the steps if there’s a disagreement. For example, a written complaint, a meeting within a set number of days, then mediation. Your attorney can tell you what’s allowed and enforceable in your state.

16.5.8 Data and privacy

Say what customer information you collect, how you’ll contact the customer, and how you protect their data. If you’ll text or call for marketing, consent rules apply (see 11.1.10 Privacy Notice and 12.6 Communication Consent Records).

16.5.9 Signatures

Get the agreement signed or accepted, and keep the record. The federal Electronic Signatures in Global and National Commerce Act (E-Sign Act) gives electronic signatures and records general legal validity for many transactions. When a law requires certain information to be given to a consumer in writing, the E-Sign Act has extra consent steps before you can deliver it electronically.

Made-up example: Brightwater Pool Service uses a two-page agreement for weekly service. It names the business and the homeowner, lists the weekly tasks, says the homeowner keeps the gate unlocked on service day, sets a monthly price billed on the 1st, needs written approval for repairs, allows either side to cancel with 30 days’ notice, and explains how customer contact information is used. The customer signs online before the first visit.

Why it matters

Memory fades. Paper doesn’t. Many disputes come down to “you said” and “I thought.”
Unclear terms lead to unpaid invoices and chargebacks (see 10.7.7 Chargebacks).
Missing cancellation notices can break federal or state rules for some sales.
A signed record helps if a customer leaves a review that isn’t accurate and you need to respond calmly with facts (see 14.6.3 Review Responses).

Who this applies to

Every business that provides services or sells on agreed terms. Very small, one-time sales, like a single haircut, may only need posted terms or a receipt. Recurring, project, and high-dollar work should always have a written agreement.

How to do it

List what goes wrong in your jobs today. Late payments, scope fights, no-shows. Your agreement should address each one.
Draft the sections on this page in plain words, or start from your attorney’s template.
Have an attorney licensed in your state review it. Contract rules vary by state and industry.
Attach or link your scope, estimate, and policies so the documents fit together.
Choose how customers sign, on paper or with an electronic signature tool that keeps a record of who signed and when.
Send it before work starts and don’t begin until it’s signed or accepted.
Store every signed copy with the customer record (see 15.3 Contact and Company Records).
Review the template once a year and after any dispute.

What proof to keep

The signed or accepted agreement for each customer
The signature audit record from your e-signature tool
Any cancellation notices and forms you provided
The version history of your template, with the date each version took effect

Common mistakes

Using a template from the internet without review. It may not fit your state or work.
Signing in your personal name instead of the business’s legal name.
Starting work before it’s signed. You lose your best chance to settle the terms.
Vague scope. “Website work” or “clean the house” invites arguments.
No cancellation notice for sales covered by the Cooling-Off Rule.
Promises in emails or calls that aren’t in the contract. The FTC tells consumers to make sure every promise is in the written contract, so expect careful customers to ask.

When to get help from a pro

An attorney licensed in your state should write or review your agreement. Questions to ask:

Which state or federal rules, like cancellation rights, apply to how I sell?
Are my late fee, deposit, and dispute terms allowed and enforceable here?
Does my electronic signing process meet the E-Sign Act and state rules?

Bill’s note

[Bill: add a short note. For example, what SiteSmarty’s client agreement covers that you learned the hard way, or a review you were able to answer well because the agreement was clear.]

How I did this for SiteSmarty

[Date I did this:]
[What I actually did, step by step: how I built and signed the SiteSmarty service agreement]
[What it cost and how long it took:]
[What surprised me or what I’d do differently:]
[Screenshot or photo to add, with private info blurred: the agreement’s section list and the signature confirmation]
[Result so far:]

Questions people ask

Do I need a written contract with every customer? Not every sale, but any recurring, project, or high-dollar work should have one. Some sales, like certain home sales, have federal and state notice rules.

Are electronic signatures legal? The federal E-Sign Act gives electronic signatures general legal validity for many transactions. Some documents and consumer notices have extra rules, so ask your attorney.

What’s the difference between an agreement and an estimate? An estimate states the price and scope for one job. The agreement sets the ongoing rules of the relationship.

Who should write my agreement? An attorney licensed in your state, or at least review the one you draft.

Audit check

Line	Question	Pass looks like	Fail looks like	Evidence to collect
11.1.1 Service agreement	Is there an attorney-reviewed agreement signed before work starts?	Current template, signed copy for each customer	No agreement, or work starts before signing	Template with review date, signed agreements
16.5.1 Parties	Are both parties named correctly?	Business legal name and customer full name	Owner’s personal name only	Signed agreement
16.5.2 Services or products	Is the work described clearly?	Specific description or attached scope	“General services”	Agreement and scope
16.5.3 Responsibilities	Are both sides’ duties listed?	Customer and business duties in writing	Only the business’s duties	Agreement
16.5.4 Payment terms	Are price, timing, fees, taxes, and late consequences stated?	All listed and allowed by state law	Missing due dates or fees	Agreement, payment terms page
16.5.5 Changes	Do changes need written approval?	Change clause and signed change orders	Verbal changes	Agreement, change orders
16.5.6 Cancellation	Are cancellation rights and charges clear and lawful?	Clear terms, required notices given	No terms, missing required notices	Agreement, cancellation forms
16.5.7 Disputes	Is there an agreed dispute process?	Written steps reviewed by an attorney	None	Agreement
16.5.8 Data and privacy	Does it address customer data and communications?	Data use and contact consent explained	Silent on data	Agreement, privacy notice
16.5.9 Signatures	Are signed or accepted records kept?	Signed copies with audit trail stored by customer	Unsigned or lost copies	Signed copies, e-signature logs

Where this fits

Do this first: 7.1.2 Core Offer, 10.9.1 Financial Calendar, 6.3.1 Business Attorney

Do this next: 11.1.2 Estimate

Sources

Federal Trade Commission, "Buyer's Remorse: The FTC's Cooling-Off Rule May Help" (checked October 17, 2026)
Federal Trade Commission, "How To Avoid a Home Improvement Scam" (checked October 17, 2026)
Federal Deposit Insurance Corporation (FDIC) Consumer Compliance Examination Manual, "Electronic Signatures in Global and National Commerce Act" (checked October 17, 2026)
Google Business Profile Help, "Tips to improve your local ranking on Google" (checked October 17, 2026)

This page explains general rules and Bill's own experience. It is not legal, tax, or insurance advice. Talk to a qualified professional about your situation.