Have you ever wondered what kind of legal contracts are required to get your small business started? Well, you might be surprised how few businesses have all their documents in place before venturing out in the market. New businesses are rising like never before across various industries. As a beginner, you must familiarize yourself with the legal aspects of your state to be protected by the law. Setting up the right contracts will ensure that you have any hiccups your way that will affect your workflow. Having the right documents in place when you start is essential to your business's success.
In this article, we will learn about a few essential contracts that can help in starting up every kind of business.
Starting a small business needs a bit of funding to step out in the market. A business plan contract is a document that includes the details and requirements when seeking finance. It is structured to present information in such a way that when an investor goes through it, he knows exactly what he is investing in. It usually includes your services or products, marketing strategies, policies and operations, advantages and disadvantages, etc. The objective is to be clear to your potential investors so that they can make an informed decision and how financing your business can be beneficial to them.
When starting a business you may want to do it with a partner or partners with whom you can share the responsibilities and the costs. If you are one of those people then you must consider agreeing to a partnership contract that documents the role of each member in your business venture. The contract would include the purpose of the partnership, the share of profits, assets, decisions, voting, withdrawals, and dissolution. Regardless of the trust between the two partners, the contract agreement eliminates any future disagreements regarding commitments or financial distributions.
Initially, your business may be limited to just partners but as you grow, you will open up doors to hiring employees, freelancers, or even contractors. While most of the employee selection is done orally, a written agreement ensures that there is no miscommunication or misunderstanding. To avoid any future conflicts, the employment contract is specific to the duties and responsibilities expected from the employee. Some of the aspects that should be mentioned in the contract include working hours, salary, position, notice period, benefits, nature of work, and so on. This agreement protects the employee and the employer which creates a formal or professional relationship that both parties can benefit from. It can also be included in hiring contractors for work orders, which establishes services to be performed, date, estimated time and cost, and equipment needed. You can use these work order templates for your business.
Having a well-written employee handbook regardless of how small or large your business is will ensure the right information is communicated. Business owners are required to provide their employees with the do’s and don’t’s that are mandated by the state and federal regulations. By doing so, your employees are obligated to the rules and regulations of your company that will ensure there are no conflicts in the future. Some of the topics covered in this agreement are harassment, anti-discrimination, benefits, compensations, incentives, discipline, dress code, leaves, safety, and security. Employee’s handbook should be made a business priority because if there are any miscommunications or misunderstandings you can be sued.
A non-disclosure agreement is one essential contract that every business must have to protect its competitive advantage. The contract ensures any sensitive or confidential information such as trade secrets, clients, external parties cannot be copied, shared, or made public. These agreements often include marketing plans, finance, website codes, client lists, business plans, etc are all confidential and if any employee is caught exploiting these trade secrets they can be sued for their actions. That’s why before sharing details with your employee, ensure that they are aware of the expectations that come along with their duties and responsibilities. This agreement protects the company from going into a loss or having their marketing efforts exposed to their competitors.
While it may not be an agreement that you look forward to creating, it is an essential part of your business. Both, large and small businesses must be prepared to have a refund policy for dissatisfied customers. These contracts allow your clients or customers to know what they expect and if they are not satisfied with the product or service, they have an option to return the goods and refund under certain circumstances. As a startup, it is good for businesses to be prepared for such events.
Using these 6 essential contracts can help you start your business on the right note and grow towards success. Keep in mind, certain states and laws require specific legal documents so ensure that you abide by the laws in your state and community.