- Important contracts for small or expanding businesses
- For all kinds of entrepreneurs and startups
- Limit your liability, ensure confidentiality, and more
There’s no shortage of paperwork when it comes to running a small business, and you may be tempted to go paperless in some parts of your company. However, having well-drafted contracts play a crucial role in the success of new or expanding businesses.
The following are some of the most important contracts you’ll encounter when starting or expanding your business. Click the heading to review an example of each type of contract.
Whether you hire employees right off the bat or take on people when you expand, you’ll want to clearly outline your expectations. An offer letter will outline the job’s responsibilities and salary. An employment contract established with those who accept an offer will cover additional topics, such as benefits and cause for termination, and can also incorporate agreements such as confidentiality or non-compete clauses (see below).
Plenty of companies deal with sensitive data and other confidential information, and if this is the case with your business you should have confidentiality or non-disclosure agreement for employees to sign. You might also consider an intellectual property assignment agreement, which helps reassure investors and secure intellectual property by assigning these assets to the company when it is formed.
An operating agreement helps establish company policies and keep disagreements from arising between founders in the future. It can cover matters such as how responsibilities will be divided, how profits will be distributed, and how management will change if a partner leaves.
If your company provides a service, a service contract outlinesthe cost of your services as well as any responsibilities and liabilities assumed by the company. It’s also important to have this documentation when contracting with third-party vendors or contractors. A sales contract is not always necessary, but if your company is selling an expensive product it will help spell out factors such as financing and warranties.
When you rent space for your company, the lease should clearly spell out factors such as the monthly rent, landlord’s responsibilities, penalties for missed payments or damage, and how long the terms are good for. Loan documents for equipment or other major purchases should also be detailed, with information such as the payment schedule, interest rate, and factors that can trigger a default.
Selling stock in your business allows you to raise capital, with shareholders benefiting from your company’s success. These agreements can be quite complex, and failing to properly document the sale of stock can result in substantial fines. Consult with an experienced attorney when crafting a shareholder agreement.