As a start up, you likely have 5 million things on your mind! This is why legal documents for startups are so important to keep on top of things. They can minimise the risk of legal mistakes which would be costly down the line.
While starting a company or business can be overwhelming, having all of the legal documents for your startup in order can make everything so much easier.
At Lawpath, we understand the challenges startups face whether you are a sole-proprietorship or a limited liability company, and this is why we have put together a comprehensive list of all the legal documents you will need to get your business up and running.
Why legal documents for your startup?
Legal documents clearly define the rights and obligations of both your business and your clients. As a startup company, having essential legal documents ready to go is so important to get off the ground quickly. By building solid legal foundations early you can safeguard against any legal issues in the future.
Relevant Legal Documents
Business Plan
A business plan is an important tool or template for understanding how each element of your business will work together to make it a success. As a startup, good orginisation practices can help you keep on top of everything that needs to be done. You can use it to create your personalised business structure and monitor progress, hold yourself accountable and control the businesses’ finances.
Additionally, it’s a great sales and recruiting tool for courting key employees and future investors. These days venture capital firms, banks and Investors insist that you have a business plan in place before they invest.
SaaS Legal Document
An SaaS legal document or agreement outlines how software systems manage customer relationships. While not all companies require this, in today’s highly technological world, most startups should consider how this will impact their business.
SaaS companies need an effective SaaS agreement that describes the service level, disclaimers and liabilities. By explaining the service level, it sets out the goals and limits of service for the user. For example, a well-described service level may clarify the minimum uptime of the service, how it is measured or the support response time for the service. Similarly, it can cover website terms.
Co-Founder Agreement
If you’ve decided to start a business with some friends, having a Co-founder Agreement can solidify all your roles and responsibilities.
Getting together with a friend or two and creating a new business is an exciting time in any entrepreneur’s life. A Founders Agreement is a contract between Co-Founders setting out the ownership, initial investments and responsibilities of each Co-Founder. In a sense, it acts as an operating agreement.
This agreement also safeguards you in the case of a dispute, as it can provide protection to show what the co-founder agreed to.
Confidentiality Agreement
A Confidentiality Agreement or non-disclosure agreement (NDA) is a legal document that you can use to disclose private or sensitive information to another party, while legally forbidding the other receiving party from disclosing that information to any other person or entity.
As a startup you want to make all of this clear before you start dealing with confidential information to avoid any legal drama. This can include any intellectual property (IP) you may deal with and any intellectual property assignment or IP assignment agreements.
Term Sheet (Seed Investment)
This Term Sheet is used for early stage startups in the lead up to Seed Round Investment. This document establishes the general terms of a potential investor coming on board in your business and to make sure each party does their due diligence.
It sets out the proposed terms including capitalisation, financing terms like liquidation preferences and anti-dilution, and key provisions to be included in the shareholders and subscription agreements, before you proceed to the full agreement.
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Services Agreement
A Services Agreement is an essential legal document that can be used if you’re a consultant or you run a business. Creating a services agreement is a helpful way to make sure you know exactly what will be provided.
A services agreement provides you with a general set of engagement terms and conditions for the provision of consultancy services. Moreover, this type of agreement ensures that both parties know what to expect and the relationship gets off on the right foot.
Shareholder Agreement
A Shareholders Agreement will help you govern the relationship between your company shareholders through things like bylaws.
Although you and your partners are on good terms now, sometimes running a company will put a strain on that relationship. A shareholders agreement helps protect your interests in these situations and clearly define shareholders’ rights. If disagreements arise, it can be very helpful to have a clear idea of what the parties agreed to before the dispute, or before something changes one shareholder’s ability to continue working in the company.
It is important to know that a shareholders agreement can only be formed when all existing shareholders express consent.
Employment Agreement
Another essential legal document is an employment agreement. They are not only a legal necessity; they can help set the tone and feel of your business. They can add extra protections to your business that national award rates do not offer, such as confidentiality and notice periods. Securing your hires with an employment contract also formalises the arrangement and the terms of employment with your new employee and will contribute to a professional and positive working relationship developing between the two parties.
After there is an offer letter employment agreements and employment contracts are a necessity and they come in many different shapes and forms. But there are three main categories that they fit into to solidify an employee contract:
Key Takeaways
When starting out in business there are so many things on your plate as a startup founder and business owner!
This is why clear legal documents for startups are so important for big and small business. They will cover everything you will need to get up and running quickly and legally.
Lawpath has a growing library of over 350+ legal documents for businesses both big and small and you can access all these documents easily. So, it is a no brainer to use our platform when starting out.
We get that you are busy and we love your entrepreneurship! This is why we have all these essential legal documents for startups ready for you to use at any moment. Also, this is why we’ve made it easy for you to hire a lawyer to obtain legal advice and help you with any of your startup’s needs.
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