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May 12, 2020

Q: Why do you need a Master Services Agreement and a Statement of Work?

Improve your contractual relationships by using a Master Services Agreement (MSA) and Statement of Work (SOW) or Work Order (WO) when engaging contractors and freelancers.

Ask Liquid: Why do you need a Master Services Agreement and a Statement of Work (SOW)?

Compliance Freelancer Management Ask Liquid

Ready to start working with a freelancer, independent contractor, or vendor? You’ll want to make sure that your company develops both a Master Services Agreement (MSA) and a Statement of Work (SOW) or Work Order (WO). Both of these contractual documents are essential when working with freelancers, contractors, and vendors.  

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Master Services Agreement (MSA)

The MSA serves as the overall contract between your company and a freelancer, contractor, or vendor. It establishes the legal terms between the parties to the agreement. MSAs identify the parties to the agreement (using legal names), specify how long the MSA is valid and how it can be renewed (if applicable), and includes legal terms such as payment terms, ownership of intellectual property, confidentiality, and termination rights.

Using an MSA saves you time and money, as you do not need to negotiate legal terms every time you start a new project. Multiple SOWs or WOs can be attached to an MSA during the period governed by the MSA. The MSA is the “master” document, which controls the terms for all associated SOWs / WOs.

For more advice on creating an MSA, review our tips for writing an independent contractor agreement. Liquid users can use our pre-existing MSA templates for freelance contractor agreements, in addition to making it easy to onboard, manage, and pay freelancers / independent contractors. 

Statement of Work (SOW) or Work Order (WO)

The SOW or WO should be used to define each project. SOWs should be as detailed and specific as possible regarding the project deliverables, how and where they will be provided, and how to measure the completion of the deliverables. For each SOW / WO, you should indicate which MSA it is attached to as this will indicate the legal terms governing the project. One advantage of using an SOW / WO is that if you need to terminate one project, you can cancel only that particular SOW / WO, without disrupting other projects.

For more advice on creating SOWs / WOs, review our tips on how to write a Statement of Work. For Liquid users, Liquid allows you to create SOWs in minutes, instead of hours

Ready to simplify managing your independent contractors, freelancers, and vendors? Sign-up for Liquid beta today!

Category: Compliance Freelancer Management Ask Liquid

Updated: May 12, 2020

Quick note: This is not to be taken as tax advice or legal advice or payroll advice. Since tax rules and laws change over time and can vary by location and industry, consult a CPA / tax advisor and/or attorney for specific guidance.

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