Q. Are contracts necessary?
A. Yes, if you are contracting for a professional service such as bookkeeping or taxes or something along those lines, it helps to have a written agreement to protect both parties. It should spell out specific responsibilities and duties for each party. It also outlines fees, payment terms, duration, and termination procedures. In my line of work (bookkeeping), I start off with a written proposal based on a free initial consultation, then the proposal turns into a three-month trial agreement to see if we are a good fit moving forward before I usually set up one-year terms.
Without a contract, there is fertile ground for misunderstanding and scope-creep (which is a separate topic worthy of its own article!). So in these circumstances, the contract is a must-needed item.
Oh, and it helps to have someone familiar with contract law review your contracts to see if they will hold up in court if necessary. Check with your state, as your laws may differ from state to state.