Many of us start business with the registration in hand. We get into deals and agreements without contracts that are meant to protect us and our businesses.
Here are 5 documents that every start-up needs to protect their businesses.
1. Employee agreement
If you are employing someone or consulting a friend to work with you in your start up, have an agreement that spells out the role, the obligations and expected pay . Most start-ups will invite their friends to ‘help them’ in their start up, and they will end up claiming shares for starting you up
2. Supplier’s agreement
When you set up a website, have a contract that states clearly what you need, and by when. Most website developers will charge small businesses the lowest rate in town, and they will get a free theme and plaster your content on it . Avoid wasting time and money and have things in writing from the word go.
3. Non-disclosure agreements
NDA is an expression of intent by both parties and a deterrent against disclosure of confidential information. Your ideas, financial information and your patents should be a secret . Your business partners, your employees and third parties may have access. Let them sign an NDA as this makes you unique and adds value to you and your business.
4. Investor Agreement
Many start-ups will get funding from friends, family and other businesses. All these are investors. Have a contract that spells out how you will use their money, when they should expect returns. Is there interest? Is it a loan or a grant/gift? Take caution when receiving money from friends to start your business. If an investor comes on board with a contract, run it by a lawyer and a mentor to ensure you are signing according to your terms.
5. Share holder/ partner agreement
We all know of companies whose Directors are ‘silent’ in a way that they don’t affect the way you run the business. Maybe they just funded the business, or you just wanted the 2nd person to have a limited company with.
Who runs the company? Who signs the cheques? What happens when you want to get another partner? What happens to your profit? Do you split in according to the shares owned? All these need to be in the contract to protect yourself.