You can either make up a blanket contract that all future employees will sign or you can make a contract specific for each employee. Either option has its advantages and disadvantages. The main advantage for a blanket form is that you only have to create it once, which saves you extra work and time in the future. The main advantage for making up a contract for each employee is that you can specify different terms for different employees. If you will have employees with a wide variety of terms, it might not make sense to have a one-size-fits-all contract.

Your employee contract should include basic information like the employee's start date and job responsibilities. You will want to detail the terms of payment. Will the employee be paid by the hour, by the project, or will the pay be based on commission? You also need to specify the compensation that the employee will receive in terms of paid holidays, sick days, bonuses, stock options, or whatever. Be sure to include the hours that the employee is expected to work and write up details about overtime if the employee is to be paid by the hour.

After outlining the details of the job, you need to address a couple of legal issues. Decide if you are hiring the employee "at-will" or based on a contract. At-will employment means that the employee is free to leave at any time and that you are free to fire the employee at any time. No justification has to be given as long as there aren't legal issues like discrimination involved. Some states are at-will states meaning that all employment is at-will. Check on the specific laws of your state. If you opt to hire your employees via a contract, they will not be able to leave and you will not be able to fire them until the contract has expired.

Include a nondisclosure agreement in the contract. A nondisclosure agreement will prevent your employee form sharing anything about your business with your competitors after the employment has been terminated.

Another thing that you might want to add to your employee contract is an arbitration clause. The arbitration clause states that, in the case of a dispute, you will settle the conflict in front of an arbitrator rather than going to court and fighting it out in front of a judge.

You might not think that you need such a formal contract when you are just hiring your old college roommate to help you with your workload but you do. You never know what can happen in an employment situation and when it is your home business on the line, you should adopt the principle of being "better safe than sorry".