5 Standard Legal Documents Every Startup Needs
Entrepreneurs are known for their energy and drive, but starting a company isn't just opening the doors, cutting a ribbon, and getting to work. There are a lot of legal i's to dot and t's to cross, and, like any legal process, that can create a slew of paperwork. So how do you figure out which documents are essential and which may only slow your startup down?
Here are five standard legal documents your startup will need, and why.
1. Articles of Organization
One of the first things you'll need to know is how you want to organize your new business. You have options in choosing a legal structure, there are advantages to each, and if you're choosing to incorporate as an LLC, the articles of organization
will act as the legal backbone of your business structure.
2. Operating Agreement
Along with articles of organization, you'll want to have an operating agreement
or founders agreement that lays out all of the contributions and responsibilities of partners and employees. You’ll also need to draw up clear employment contracts when you are ready to hire new employees. If there are co-founders, they should sign a comprehensive operating agreement. Most startups begin with only a few people on staff, so delineating who is responsible for what up front will make sure you get off on the right foot and keep your business on the right track moving forward.
3. Invention Assignment Agreement
The best part of your startup is the idea. And you and your employees are sure to come up with some more. So how do you protect the ideas and inventions your employees create? An invention assignment agreement
provides that all inventions made by an employee/contractor while working for the employer belong to the employer, and are essential in keeping intellectual property out of the hands of competitors.
4. Non-Disclosure Agreements
Paired with an invention assignment agreement, a valid non-disclosure agreement
can ensure that proprietary business ideas, confidential information, and inventions stay in-house. Not all NDAs are the same, and not all of them are enforceable, so make sure yours are drafted correctly.
5. Stock Purchase Agreements
Even if you're not planning an IPO for potential investors, you still need to know how shares in your startup will be allocated. And you might want a stock purchase or shareholder agreement
, even if you're a sole founder of the company.
Figuring out which legal documents your startup needs and properly drafting those documents is a job for the experts. You can contact an experienced commercial attorney about getting your legal documents in order today.
If you haven't started your business yet, you can complete business formation documents from home with simple, DIY options customized for your state
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