4 Vital Legal Documents Every Business Should Have


4 Vital Legal Documents Every Business Should Have

It’s a good thing for business owners to focus on the business and keep improving to meet the ever-dynamic needs of their customers and industry.

But it becomes a bad thing when they neglect other equally important aspects of their business, especially those that aren’t their core. At best, they ought to delegate these other tasks to professionals who major in them.

Legal is one of these “other” aspects no business can do without, and unless you’re a lawyer or something close, you’ll most likely not find it interesting.

You can’t afford to downplay the place of legal in your business. Law is what makes your business what it is, not really your big idea. And same law can mar it. So you want to make sure your business is legal compliant at all times.

Legal documentation is one area you don’t want to toy with. You’d save yourself a lot of frustration – legal battles and sanctions – down the line to get your legal documents well drafted by competent business lawyers.

To start with, here are 4 vital legal documents your business should have:

1. Operating Agreement

Whether required in your state or not, it’s important to have an operating agreement (aka Founders Agreement) that details the position of the founders; rights and obligations, profit and loss sharing, conflict resolution, decision making, and so on.

This agreement looks to avoid dispute from partners in a business that may arise in the future.

The operating agreement should be as comprehensive as possible, and all founders and key members of the business must sign, after which it becomes binding on all.

2. Non-Disclosure Agreements (NDA)

Information could be expensive, and the value goes up especially when it’s private. You want to protect such information from leaving the confines of your company and getting into the wrong hands.

The best way to go about this is to ensure everybody that gains access to your information undertakes to hold such sensitive (or otherwise) information in the strictest confidence.

An NDA helps you to achieve this. It helps you create a confidential relationship between your business and employees, partners, contractors, and all who have access to your sensitive business information.

Ensure it’s always readily available, and you’re quick to make parties sign it before doing anything business-related with them.

3. Employee Contracts

Setting employee expectations beforehand, when hiring new employees, is a great move against future company-employee disputes.

An employee contract, though must conform with the applicable employment laws, helps you communicate those expectations and your company policies, and then ensures your new hire agrees to the terms within.

Employee contracts can also help you achieve other things like protecting confidential information, discouraging employees leaving too soon, preventing poaching your clients or working for your competitors, etc.

4. Shareholder Agreements

And when it comes to exploiting private investments, a shareholder agreement should be created to enable shareholders understand their rights and when those rights can be exercised.

There are tons of other legal documents a business should have, depending on the stage they are, but these 4 are very vital ones you really can’t afford to ignore. They are basically more about protecting yourself or your business from other people than it is about avoiding government troubles.


Jimmy Rohampton is a freelance writer, blogger and business consultant from Southwest London. He travels the world and helps people master blogging and online marketing at HowToCreateABlog.org. Think you're interesting and he should know you? Say "Hi" to him at Jimmy@HowToCreateABlog.org

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