The Importance of Service Agreements for Home Service Businesses

Protecting yourself and your business is essential. You provide quality services and deserve to get paid on time without issue.

This is why service agreements are essential for every home service business.

What is a service agreement?

A service agreement is a legally binding agreement between a service provider and their client. It’s also called a service contract or contract for services.

It outlines the scope of work, prices, schedule, and any contract terms to protect your business. They’re sent for both one-off projects and ongoing work.

What is the purpose of a service agreement?

Service agreements are essential for home service businesses. They help establish the following:

• Customer expectations. Customers know the specific service they’ll receive, when work occurs, and how much everything costs.
• Payment terms. The agreement confirms payment terms, including payment methods and a payment schedule. It acts as a legal document to ensure payment is received. If a late or incorrect payment is received, follow up with the customer.
• Responsibilities and deliverables. The service provider and customer both know their obligations. All deliverables are outlined in the written agreement.
• Dispute resolution. Information to address a potential dispute is always included. If an issue arises, fall back on the agreed-upon terms.
• Legal protection. A service agreement can act as a legally binding contract when dealing with a dispute, such as a customer refusing to pay for work done. Reference the contract terms as needed.

Without a service agreement, you have no legal protection. Customers also become dissatisfied if there is no outline or schedule to follow.

So, you should always have an agreement in place for organization, ease of work, and insurance.

Service agreement vs service contract

The terms “service agreement” and “service contract” are often used interchangeably. In many cases, they refer to the same documentation.

Contracts can be seen as more formal and, therefore, more enforceable. However, both a contract and an agreement provide legal protection once signed by both parties.

Both a service contract and service agreement outline a clearly defined scope of work, pricing structure, and terms. You can use “contract” or “agreement,” but be consistent with your terminology throughout your business.

How to create a service agreement

Putting together a service agreement is straightforward. Once you build it, you can use it as a template for all future contracts. Having a service agreement template speeds up the process.

Disclaimer: This content is for informational purposes only and should not be considered legal advice. Always consult with your legal or financial advisor who is familiar with contract law to make the right choice for your business.

Include these details in your service agreement:

1. Business information

• Company name
• Email address and phone number
• Contact person

2. Customer information

• Customer name
• Email address and phone number
• Mailing address

3. Scope of services

Include a section to describe the service you’re providing. If you’re providing more than one service, list them separately. If the client has purchased a specific package, outline everything included.

The scope of services should be defined for each separate visit made to the customer’s address.

4. Schedule

Outline a schedule for when services are completed. For recurring work, specify if it’s weekly or biweekly. The schedule can also be seasonal, from September to November.

For large projects, outline a longer schedule for each phase of service and include dates for each scheduled service.

5. Prices for each line item

Outline each line item with a price. Include tax, where applicable, and a total cost. These details should follow the original quote or estimate sent to the client.

Pro Tip: If you send binding estimates, including estimate disclaimers, the client will better understand what they agree to ahead of the services agreement. 

6. Terms and conditions

Include details about your insurance policy, payment terms, and cancellation policies. Include a clause for each of the following:

• The type of insurance you have and what it does and doesn’t cover
• A termination clause or how much notice to give to cancel services
• Fees for late payments and unpaid invoices
• Blackout dates for services such as holidays

7. Disclaimers and warranties

Outline disclaimers for any products you’re using or selling. These disclaimers may include pesticides, cleaning products, or other materials. Include information about warranties for AC parts, windows, or shingles, for example.

8. Client obligations

If the customer needs to do anything before service occurs, state so in agreement. These responsibilities may include:

• Moving vehicles out of their driveway
• Moving furniture out of a room
• Allowing access to an attic or garage

9. Signatures from both parties

Leave space at the end of the contract for you and your customer to sign off on everything. Include dates with each signature.

What is an example of a service contract?

Use Microsoft Word or Google Docs to build a simple service contract template. Add headings to break up each section, and insert tables for additional information as needed.

If you’re unsure where to start, find a free service contract template online. Sites like eForms offer templates that are easy to use, like the example below.