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The importance of having a service agreement when operating a business is discussed in this video tutorial. As a newbie contractor, it is crucial to protect yourself by ensuring you have the necessary paperwork in place before starting work. Clients will typically request insurance information, EIN number, and other documents before finalizing a contract. Moving quickly to start work may result in forgetting to protect yourself, which is why a service agreement is essential to outline terms and protect both parties involved in the business transaction.