Legal base of your business should be strong enough for it to achieve long term success. Budding entrepreneurs forget about it as they are more focused towards growing their vision, hence making the most common mistakes in the early growth. This is why it is essential for startup businesses to acquire and sign certain basic legal contracts at the early stages of their growth whether it is for hiring, partnerships, proposals and disputes to ensure their business is fully protected. Here are some of the legal contracts that will make sure your business is protected:
- Confidentiality Agreements: Non-Disclosure, Non-Compete & Non-Solicitation Agreements If you don?t make confidentiality agreement then you may have to face loss of business, clients and it may overall affect the productivity of your business. Non-Disclosure Agreements (NDA) can be made with parties who are privilege to sensitive information and make sure that they do not use them wrongly. Non-compete or Non-solicitation Agreements are entered into to protect the training, expertise; knowledge imparted to your employees regarding your business and is often included in hiring documents.
- Hiring Documents: Employment And Freelance Agreements Drafting well-defined contracts between you and your employees can provide a clear understanding of duties, responsibilities, and obligations both parties expect to achieve. An Employee Agreement governs the terms and conditions of employments, as well as rights and obligations of both parties. Employment contracts have provisions pertaining to salary, bonus, benefits, leave and termination.
- Investment Documents: Founders? Agreement, Term Sheet & Share Purchase Agreement As the startups starts operating, the co-founders tends to become busy in day to day running of their business and leave important legal matters for discussion in later stage, this causes road blocks in the future. A Founders Agreement promotes clarity amongst the founding team outlining various roles and responsibilities, the equity vested in each entity, and the ownership of intellectual property to minimize risks in case of a dispute. When you are going for funding you need term sheet, which include the investment amount mode of payment, mode of security invested in, due diligence and pre-emption rights. Lastly you need a Shareholders Agreement, this contract will clarify the powers of your shareholders as well as the rights of your company as an issuer of shares.
- Collaborative Documents: MoU?s & Joint Venture Agreements It saves your business a lot of time and effort if you have a framework to negotiate business. When you do business with new party, you need to draft Memorandum of Understanding. It is a document that contains the basic understanding the two parties have reached for any project and captures the intentions of both parties. Another important business collaboration agreement is a Joint Venture Agreement, which can allow your business to access newer markets and resources, while ensuring the sharing of risk.
It is a summarization of an article from Your Story. For more information, visit https://inc42.com/resources/simple-legal-contracts-put-business-order/