Taking your first step into the realm of startups is an exciting time. Before you can push forward, do you know what you need to get started?
There are a lot of important business documents that you cannot ignore. Without them, you might be in major legal trouble if you try to do more than chat about your great new business idea.
We have the five most important business documents you need to get your startup started.
1. Business Formation Documents
To start, you need to file documents to create a legal business entity. This will help set the foundation for your business and cover personal liability and taxes.
There are three major forms of businesses you can choose from.
The first is a corporation. This allows you to get outside financing and allows you to offer shares in the business to employees.
The second is an LLC, which offers more flexibility in how you operate the business and share profits.
The last form is an S corp. These companies distribute their profits and losses to the shareholders and often avoid federal taxes. For more information, here are documents for starting an S Corp.
2. Governing Documents
To operate as a professional business entity, you must have governing documents. These showcase how a business operates, like how shareholders can operate and organize or how to decide where profits and investments go.
These documents should cover everything that a company does and dictate how it does it. Many startups ignore this because everyone involved knows each other, but one disagreement could tear the whole company apart.
3. Intellectual Property Assignment Agreement
That idea you had to start your company is the foundation of your entire startup. It is intellectual property that needs protection at all costs. Intellectual property covers any kind of product or even an idea for a service.
Without this agreement, your company cannot use the idea if a shareholder or employee created the idea before the founding of the company. You must transfer the rights of it over with one of these agreements.
IPAAs and NDAs are common materials to use when starting a business.
Shareholder agreements are similar to the governing documents, but with stronger specifications. They outline shareholder details, such as the nature of the shareholder position and how they interact with each other.
This set of documents also describes how buying or selling the company works and how to settle shareholder disagreements.
5. Employee Contracts
Employee contracts are the foundation for how the employee/employer relationship work in your company. Employee contracts are a vital part of smooth management.
You need a clear and strong employee/employer relationship. If you don’t manage your employees well, you’ll have a hard time keeping a stable workforce. Do your employees right and your business will succeed.
Getting Your Business Documents in Order
Starting a business can be a rewarding experience, but dealing with business documents isn’t always interesting or easy. It is a required part of the process though, so doing it right the first time is important.
From the legal documents to marketing strategies, we at AllTopStartups have guides for all your needs. Check them out.