What Legal Documents Does A Startup Need?
The rewards of being an entrepreneur are many. From being your own boss to having no ceiling on the amount of money you can make. Whichever way you look at it, being persistent in growing your startup will lead to high returns. However, there is a side that is rarely mentioned when talking about startups: challenges.
One of the biggest challenges startups face is bureaucracy, these are unnecessary hurdles created by authorities. You will be required to have all the necessary legal documents before you can embark on your entrepreneurial journey. So as to know what challenges you face ahead, here are some legal documents you will require:
Intellectual property agreement
Having investors is one of the key reasons businesses will experience growth. The next question you ask yourself should be: How do I attract investors? If your company is tech-based having an Intellectual property agreement will attract investors. This not only guarantees you a position of strength, it also ensures no one can copy your product and sell it to your consumers.
In a nutshell, this could be the determinant between you gaining investors or having them knock off your product.
For any startup, employees are a key factor in determining the company’s growth. Why should your company be any different? Having employment contracts for all employees not only protects them, it also protects you.
You should ensure the contract is fair to the employee. Salary and bonuses should be clearly indicated. On top of that, ensure employees understand all the clauses of the contract. To ensure there is no ambiguity within the contracts, have them drafted by a lawyer.
The business world is a murky world. Expect to backstabbed and have your ideas copied or stolen. Once all employees have signed the employment contract, have them sign a non-disclosure agreement.
The agreement works to protect your business’ ideas and secrets. Once employees are bound by the agreement, you can sue them for damages if they release information about the company. An NDA also works to create loyalty within the company; employees that don’t plan to stay loyal to the company are likely to refuse to sign the agreement.
It is important for your startup to have its internal by-laws. The laws work to create a stable working environment. They ensure proper laws exist to handle internal problems. A look at the company’s by law can also guarantee interest from investors.
Articles of incorporation
These articles of incorporation will determine the success or failure of your business. How? For starters, companies that are based on the sole proprietorship are likely to have the owner’s assets seized in case of bankruptcy. However, limited liability companies assets are the only ones attached in case of bankruptcy.
Furthermore, companies that have been incorporated have fewer tax obligations and fewer fees compared to sole proprietorship companies.
Adherence to the legal documents mentioned above guarantees fewer hiccups in the startup world. I know you don’t want complications as you embark on your journey, right?