Legal documents for startups are the written contracts that record who owns what, who does what, and what happens when something changes between founders, employees, contractors, customers, and investors. Most Australian startups need a core set of eight: a Co-Founder Agreement, a Shareholders Agreement, a Confidentiality Agreement (NDA), an Employment Agreement, a Services Agreement, a Term Sheet, a Privacy Policy with Website Terms, and a Business Plan. You don’t need all eight on day one. You do need the first three before your first hire, and all eight before your first funding round.
Most founders put these off. That’s the honest truth. You know you should have a shareholders agreement, but you and your co-founder are getting on fine, so it feels like paying for a divorce lawyer on your wedding day. The problem is the legal documents you put off almost always come up at the worst possible moment: a dispute, a funding round, a departure, an acquisition offer, a Fair Work complaint. Get them in place early, and they sit quietly in a folder. Leave them until you need them, and they’re expensive to fix and often unenforceable.
- Eight documents cover almost every Australian startup. Co-Founder Agreement, Shareholders Agreement, NDA, Employment Agreement, Services Agreement, Term Sheet, Privacy Policy with Website Terms, and Business Plan.
- Order them by when you actually need them. Co-Founder and Shareholders Agreements go in before you build the product. Employment and Services Agreements go in before your first hire or client. Term Sheet comes out only for a funding round.
- A Pty Ltd doesn’t protect you if you’ve signed personal guarantees. Leases, loans, and supplier accounts often require directors to guarantee them personally. That shield most founders rely on is thinner than it looks.
- The Unfair Contract Terms regime now carries civil penalties. Since November 2023, unfair terms in small-business contracts can trigger penalties up to $50 million. Generic templates from the internet are more dangerous than they used to be.
- Template plus review beats bespoke or DIY. For many of these documents a contract you create online alongside a legal advice plan costs a fraction of a bespoke draft, and catches the common issues founders don’t know to ask about.
Why legal documents for startups save you more than money
Founders tend to think about legal documents as compliance — boxes to tick, expenses to delay. Experienced founders treat them as decisions made in advance. Your shareholders agreement is effectively a set of answers to questions you haven’t been asked yet. Who gets to sell shares? What if one of you wants out? Who decides about the next hire? Getting those answers down on paper while everyone is still getting along is the whole point.
When those questions finally arrive, usually at a point of tension, the difference between founders who decided early and founders who didn’t is enormous. The first group has a document. The second group has an argument.
Across Lawpath consultations with business owners it is clear that the founders who engage early to get Co-Founder Agreements or Shareholders Agreements in place rarely come back with disputes. The founders who skipped the paperwork come back with issues relating to money, roles, IP ownership, or what happens when someone leaves. What the document does is capture what was already agreed, in plain writing, before the stakes get personal and memory gets selective.
The 8 legal documents every Australian startup actually needs
Build the stack in this order, not alphabetically and not by document type. The sequence below reflects when you actually need each one in the life of a startup. Follow it and you’ll never be caught mid-dispute without the document that would have resolved it.
1. Co-Founder Agreement
This is the first document you should put in place, well before you incorporate, build the product, or put money in. A Co-Founder Agreement records what each founder is bringing to the table (cash, time, IP, connections, skills) and what they’re getting in return. It covers equity splits, vesting, roles, decision-making authority, and what happens if a founder leaves.
The most common pattern we see is founders splitting equity based on enthusiasm rather than contribution, then discovering six months later that one person is putting in 60 hours a week while another has gone quiet. Without vesting, the quiet founder keeps their half of the company. With a four-year vesting schedule and a twelve-month cliff, the company keeps most of those shares if the founder leaves early.
In Australia, a Co-Founder Agreement is generally treated as a pre-incorporation sketch rather than a binding, court-enforceable contract. Once you form the company, the substantive terms move into the Shareholders Agreement and Company Constitution. The real value of the Co-Founder Agreement is that it forces the honest conversation early, which makes the later Shareholders Agreement drafting far more straightforward.
2. Shareholders Agreement
Once you’ve incorporated as a Pty Ltd, the Shareholders Agreement becomes the single most important governance document your company has. It sits alongside the Company Constitution (which Australian companies can rely on the replaceable rules in the Corporations Act 2001 (Cth) for, but most serious startups don’t). Where the Constitution sets out how the company operates as a legal entity, the Shareholders Agreement governs the private relationships between the people who own it.
Good ones cover: how shares are transferred, who gets a seat on the board, what decisions need unanimous approval, drag-along and tag-along rights, pre-emptive rights on new share issues, dispute resolution, and what happens when someone dies or leaves. That’s a lot to fit in one document. Most founders over-complicate it anyway.
We saw a clear example of this on a recent brief, where a medical centre founder was drafting a partnership arrangement with a co-founding GP. He’d already thought through a 55/45 share split, quarterly profit distribution, a split remuneration model combining a director rate with contractor billing, transfer restrictions limiting share sales to AHPRA-registered GPs willing to work 38 hours a week, a six-month exit notice, and a seven-day mediation process using a mutually-agreed third party. All of that was reasonable thinking. But stitching it into an enforceable shareholders agreement that also plays nicely with the Constitution and complies with the Corporations Act takes a lawyer, not a template.
If you want to understand why this document matters in more detail, our guide on when to use a Shareholders Agreement walks through the core clauses.
3. Confidentiality Agreement (NDA)
Early-stage startups show their idea to investors, developers, potential co-founders, advisors, and freelance designers before they’ve built real legal protection around it. A mutual NDA is the floor: it stops the other party from disclosing or using what you share for any purpose other than the one you’ve agreed.
Most founders ask for a one-way NDA when a mutual one would serve them better. If the advisor or developer is going to share their own know-how back, you both want protection. And most founders define “confidential information” too narrowly or too broadly. Either way, the clause becomes hard to enforce. Our guide on defining confidential information in NDAs covers what to include and what to cut.
Worth knowing: sophisticated investors often refuse to sign NDAs at the pitch stage, and that reflects the reality that they see dozens of pitches a week and can’t reasonably track which idea they saw first. Your real legal protection with investors comes later, at the Term Sheet and SAFE stage, rather than at first coffee.
4. Employment Agreement
Hire your first person and you’ve stepped into the Fair Work Act 2009 (Cth). Minimum wages, leave entitlements, notice periods, unfair dismissal protections: they apply whether you’ve signed an agreement or not. A written Employment Agreement doesn’t override the Act, but it lets you add what the Act doesn’t. Think confidentiality, IP assignment, restraints of trade, notice periods longer than the statutory minimum, and clear performance expectations.
Australian startups usually need three variants, depending on who you’re engaging:
- Full-Time Employment Agreement: for permanent staff on the books with leave, super, and notice entitlements.
- Casual Employment Agreement: for ad-hoc workers on hourly rates with no guaranteed hours. Common in hospitality, retail, and early-stage ops.
- Contractor Agreement: for independent contractors who invoice you rather than sit on payroll.
A good illustration came through recently when a founder opening a new café in suburban Melbourne contacted Lawpath the week before launch, asking for casual employee contracts on an ad hoc basis (meaning they wanted one drafted each time they needed it). The cheaper approach is to set up one well-drafted casual template at the start and re-use it for each new hire. Most startups only realise they need employment agreements at the hiring moment and end up paying rush rates, or pulling something off the internet that doesn’t meet Fair Work standards.
Watch the contractor-vs-employee line carefully. The Fair Work Commission and the ATO both look at the substance of the arrangement rather than the label you put on it. Someone you call a contractor, but who works fixed hours under your supervision with no other clients, will be treated as an employee in the eyes of the law, and you’ll end up backpaying super, PAYG, and leave entitlements.
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Get started5. Services Agreement
Your Services Agreement is the contract between your company and your paying customers. It sets out what you’re delivering, for how much, on what timeline, with what warranties, and what happens if things go wrong. If you sell services (consulting, design, development, support, managed services), this is your revenue-protecting document.
Most founders write Services Agreements that are far too generous to the customer. Payment terms of 60 days when 14 would do. No cap on liability. Unlimited revisions. Scope creep written in as a feature. Each of those is recoverable. But only if the agreement sets the boundary clearly in the first place. Once you’ve performed the work on soft terms, the customer has no reason to renegotiate.
Sitting over the top of all of this is the Unfair Contract Terms regime. If you’re trading with other small businesses (under 100 employees or under $10 million annual turnover, as of November 2023), the Australian Consumer Law can strike out terms that are unfairly one-sided. And since 2023 those terms can now trigger civil penalties. More on that below. For a deeper look at scope, payment, and termination clauses, our guide on what a Services Agreement covers walks through each section.
6. Term Sheet
You only need a Term Sheet when you’re raising investment, typically a Seed or Series A round. It’s a short document, usually non-binding except for specific clauses like confidentiality and exclusivity, that captures the headline terms of the deal before the full investment agreement is drafted.
The Term Sheet covers valuation, amount raised, share class, liquidation preferences, anti-dilution provisions, board composition, information rights, and pre-emptive rights. The detail gets filled in later. But what you agree at the Term Sheet stage sets the floor for the final documents. You can’t easily walk back a 1.5x liquidation preference you’ve already agreed to in writing.
For Australian seed rounds, many founders now use a SAFE (Simple Agreement for Future Equity) or convertible note instead of a priced round. That gets you out of valuation negotiations early on, at the cost of less certainty about ownership dilution at the next round. Our companion guide on legal documents for Seed through Series D funding covers SAFEs, term sheets, and the document sequencing across funding stages.
7. Privacy Policy and Website Terms
If your startup has a website, app, or online form that collects any personal information (names, emails, phone numbers, IP addresses), you need a Privacy Policy. The Privacy Act 1988 (Cth) technically exempts small businesses with under $3 million in annual turnover, but the exemptions don’t apply to health service providers, contractors that work with the government, or businesses that trade in personal information. Most startups aiming for growth should adopt the Australian Privacy Principles anyway. It’s what investors, enterprise customers, and the Apple App Store expect.
Alongside the Privacy Policy, Website Terms and Conditions set the rules for how people can use your site or app. Acceptable use, IP ownership of your content, disclaimers on the information you publish, limitation of liability. These two documents together are the legal minimum for any online startup.
Common mistake: founders copy another startup’s Privacy Policy, change the name, and publish. That works until a customer makes a privacy complaint or the OAIC asks to see your data-handling practices. At that point the gap between what your policy says and what you actually do becomes an enforcement risk. Write (or buy) a policy that matches what you actually do with data.
8. Business Plan
A Business Plan sits outside the strict legal stack. You won’t face a lawsuit for not having one. But it operates as the commercial document that grounds every other agreement, and lenders, landlords, and investors will ask for it. Co-founders should write it together as a way to pressure-test whether they genuinely agree on where the business is going, and revisiting the plan every 12 months tells you whether the legal structure still fits the reality.
Keep it short. Two to four pages is plenty for the first year. Who your customer is, what problem you solve, how you make money, your costs, your first twelve months of milestones. You can always expand when you need to raise money or take a lease.
What we see in Lawpath consultations
Three patterns show up again and again across advisor calls and briefs with early-stage founders. Knowing about them in advance is worth more than reading another generic checklist.
The Pty Ltd doesn’t protect you from personal guarantees
Most founders incorporate a Pty Ltd because “it protects your personal assets”. That’s partly true. It’s also partly marketing. The moment you sign a commercial lease, a supplier account, a bank loan, or a personal credit guarantee on behalf of the company (which almost every early-stage company does), the limited liability shield has holes in it. A pattern from a recent brief: a business owner refinancing company debt via a second mortgage over their residential property, with both directors signing as guarantors. The financier required a solicitor’s certificate to prove the personal guarantee had been independently explained.
You can’t always avoid personal guarantees, and the answer isn’t to refuse them outright. The practical fix is to know when you’re giving one, read what you’re signing, and get independent advice on anything that hooks your personal assets into the company’s obligations.
Founders think about the relationship in more detail than any template captures
When founders come to Lawpath for a shareholders or partnership agreement, they usually arrive with more detail worked out than a standard template can hold. Split remuneration structures, profession-specific transfer restrictions, bespoke exit notices, custom dispute-resolution timelines. A template plus a quick legal review costs a fraction of a bespoke draft, and it’s often enough. But “download the template and sign it” rarely works when the real arrangement has custom moving parts, which it almost always does. The honest answer is: start with a template, then get it reviewed for the bits that actually matter to your arrangement.
Employment agreements get drafted at the hiring moment, not before
Founders routinely reach out the week before hiring their first casual or contractor, asking for a one-off draft. Sometimes the new hire starts on Monday and the agreement isn’t signed until the following Friday. That works until someone claims unpaid entitlements or there’s a disagreement about confidentiality. Set up your employment templates once, for each of the three main categories (full-time, casual, contractor), before you need them. Then every new hire starts signed.
The Unfair Contract Terms regime changed the stakes in 2026
If your startup is reusing customer templates from a few years ago, or downloading template T&Cs from the internet, this section is the most important one for you.
Since November 2023, the Unfair Contract Terms regime under the Australian Consumer Law (Schedule 2 to the Competition and Consumer Act 2010 (Cth)) carries civil penalties. Before that, an unfair term in a standard-form contract was just unenforceable. Annoying, but not financially fatal. Now, a business that includes an unfair term in a standard-form small-business contract can face penalties up to the greater of $50 million, three times the benefit gained, or 30% of adjusted turnover.
Coverage extends to contracts with consumers and with other small businesses (under 100 employees or under $10 million annual turnover). The ACCC’s first enforcement action under the new regime came in June 2025, against a platform that used terms imposing $5,000 minimum penalty fees, auto-approved timesheets, unilateral fee changes, and one-sided indemnities.
What this means for a startup drafting a Services Agreement, a SaaS Terms document, or a set of website T&Cs: the shortcuts that worked in 2022 are genuinely risky now. Check any clause that lets you unilaterally vary terms, auto-renew, impose one-sided penalties, limit liability in a lopsided way, or lock customers into long notice periods. If the balance of power sits entirely with you and the customer can’t reasonably push back, that’s the pattern the ACCC is looking at.
When to actually draft each document (and when to wait)
Not every startup needs every document on day one. Sequencing matters.
| Stage | Documents you need | Documents you can wait on |
|---|---|---|
| Pre-incorporation (idea, testing, pre-revenue) | Co-Founder Agreement (or even a one-page memo of understanding) | Everything else |
| Incorporation (forming the Pty Ltd) | Shareholders Agreement, Company Constitution, NDA | Term Sheet, most employment docs |
| First hire | Employment Agreement (matching the hire type) | Term Sheet |
| First paying customer | Services Agreement, Privacy Policy, Website Terms | Term Sheet |
| First funding round | Term Sheet, updated Shareholders Agreement, SAFE or Subscription Agreement, cap table | None |
| Ongoing | Business Plan (review annually), contract reviews at renewal | None |
