Consultancy agreement with a limited company (client to consultant)

What’s a consultancy agreement with a limited company (client to consultant) and when should you use one?

A consultancy agreement is an agreement between a business (usually referred to as the “client”) and a service entity (usually referred to as the “consultant”).

The consultant agrees to provide a service to the client for a fee.

The consultant may agree to provide a one-off service for a set fee or continuing services to the client for a predetermined length of time for a fee.

This template is drafted for use by any business (client) looking to take on a consultant but where the consultant is a limited company.

It is drafted by the business as the client and not by the Consultant.

If you are looking to take on a consultant who is an individual or a sole trader you should use the following template instead:

Consultancy agreement with individual consultant

There is great advantage in presenting your own contract, drawn to protect your interests.

The contract is suitable for any size or type of consultant who acts through a limited company.

It is for a client to present to his/her consultant.

This is an “umbrella” contract, set up for the possibility of future assignments under the same terms.

That way, if you want more work from the same consultant, all you have to do is define it and refer to this agreement.

Even if you expect never to re-employ, you do not have to delete anything on that account.

What else might you need?

It’s important to distinguish contractors who are self-employed from employees, not least for tax reasons.

Self-employed persons operate either as sole traders (and would use our related template contract for services for a consultancy company in those circumstances) or as a part of their own limited company (and would use a contract such as this template).

Self-employed contractors can choose what work they do, and they can decide when and where they complete the work.

They are able to outsource work to others, they provide their own work equipment, and they often work for more than one client at a time.

They’re responsible for arranging their own tax and Social Insurance contributions.

They have fewer rights than employees.

It’s important to ensure that a contractor is not an employee in disguise – even if that outcome is inadvertent.

Getting it wrong can mean that both parties will face fines from the Revenue.

The wording of this template is carefully constructed to provide clarity about your respective intentions and to avoid ambiguity about the role that the consultant is to play.

Of course, drafting a document is one thing.

You’ll need to ensure that your relationship in practice is consistent with what’s described in this document and conforms to the legal rules.

Our guide contractor or employee also provides helpful background.

You should also consider having a non-disclosure agreement to protect any proprietary and confidential information you may need to share with the consultant to enable him/her to advise you correctly.

Use our non-disclosure agreement for consultants/contractors