Journal logo

8 Legal Documents to Start Your Business

by Alejandro Uria about a year ago in list

Legal Documents for Small Business Success

Small businesses are the bedrock of any economy. In the United States alone, almost all employers actually come from small firms. They create 47.5% of all jobs in the private workforce, according to the latest SBA report. But getting a small business off the ground can be difficult, especially if you don’t know the legal concepts and resources necessary to get your business up and running. Luckily, in this article, we’ll walk you through 8 essential legal documents you need before you start selling!

1. Business Plan

Though a business plan usually isn’t a technical legal document, it is required of you if you want to either finance or sell your business down the road. A business plan does what it sounds like – it lays out the foundation for what your business will do, and explains the roadmap that you will take to get your business where you want to go. Sharing this business document can also be a great way of attracting funding or investment to get yourself off the ground.

It’s important to keep a few things in mind to create the best business plan possible. First, your business plan should lay out the problem that exists that your business is working to solve. Next, your plan should explain how your business – what you have created – will work to solve this problem. Lastly, it explains why your business and your idea is the best fit to resolve this issue.

Essentially, your business plan lays out for you and any potential investor why you created your business and why it is the perfect fit to solve a particular problem that exists.

2. General Partnership Agreement

When you first start your business, you’ll likely be doing it with a partner. After all, including someone else from the ground floor typically means double the funds, and ensures that you share at least some of the work. While everyone hopes that a partnership like this won’t dissolve throughout the course of business, regardless, it’s essential that you layout your relationship with your business partner ahead of time, which can be done through a business partnership agreement.

Business partnership agreements help to determine what you and anyone partnering with you to run your business are responsible for. Laying these terms out can help down the road if a legal dispute arises, and helps to ensure that everyone involved in your company knows what they have to do and when they have to do it.

3. Articles of Incorporation or Organization

Articles of incorporation are legal documents that legally start a corporate entity. Under US law, corporations are their own, separate legal entity, with all the rights and tax liabilities associated with that status.

An LLC is formed through the creation and filing of articles of organization, rather than articles of incorporation. LLCs, while not an individual, legal entity, can still provide some benefits and protections to your company. For instance, LLCs often have more favorable tax rates, which can be great for small businesses. Additionally, they also offer certain protections from business liability.

A professional or attorney specializing in business, corporate, or tax law can help you decide which fit is right for your startup. Regardless of which you file, these articles will contain information such as your company’s name, its mailing address, and the business owners and operators.

4. Operating Agreement

Operating agreements are for companies that are registered as LLCs. While they are not usually required, they can be a great legal document to have, because they help to establish how financial and operating decisions are made and who has the authority to make those decisions.

An operating agreement will lay out who owns your LLC/business, how it will be managed and who makes the management decisions, what each owner of the business is responsible for, and who within your company retains financial and/or civil liabilities, should something happen.

5. Independent contractor agreement/contract

When you start a small business, it’s unlikely that you’ll be able to do everything that comes with running it. You’ll already have enough on your plate trying to get investors involved, getting your business off the ground, etc.! As a result, you’re probably going to hire independent contractors to help you out with some of the aspects of your business, especially because they’re also cost effective.

To ensure that your independent contractor completes the tasks you’ve assigned diligently and on time, it’s a good idea to layout their responsibilities and your expectations through an agreement or contract. Independent contractors are also required to pay their own taxes, so in creating this type of agreement, you can make sure that you don’t pay unnecessary taxes you don’t need to.

6. Non-Disclosure/Confidentiality Agreement

When you hire an independent contractor, you want to make sure that any information you give them that’s necessary to complete their work remains private. You want to protect what makes your business unique, and having an employee or independent contractor sign a confidentiality agreement ensures that by making these individuals promise that they will not share any private, confidential, or proprietary information.

7. Non-Compete Agreement

Similar to a non-disclosure or confidentiality agreement, non-compete agreements can restrict employees or independent contractors from taking your ideas and starting a business out of them. It also means that someone you hire to complete a job cannot just quit to join a competing business in a specific area, which is usually outlined in this non-compete agreement.

8. Applicable Local Licenses and Permits

Every state has different requirements and documentation that need to be filed to get a business up and off the ground. Depending on your business, necessary documentation and licenses may include liquor licenses, zoning permits to carry out a specific activity in the community, sales-tax permits (depending on your goods), and more.

Because starting your own business can be hard enough, it’s important that you look into hiring an attorney or professional that specializes in corporate, tax, or business law generally. Attorneys can help you figure out what type of licenses you need to file, what permits you need to complete to run your company. And the more help you have, the quicker you can start making money!

Alejandro Uria
Alejandro Uria
Read next: Why Denny's Is the Perfect Starter Job for a Cook
Alejandro Uria

My name is Alejandro Uria. I am an advocate for growing access to justice for businesses and individuals who can't afford it. I love writing about startups, legal tech, and intellectual property.

See all posts by Alejandro Uria

Find us on socal media

Miscellaneous links