Tip:
Highlight text to annotate it
X
When you decide to become an entrepreneur and run your own startup or small business,
it can be overwhelming to deal with all of the legal paperwork and formalities that come
along with starting up and many entrepreneurs become overwhelmed and just push this to the
side. It's important to cross your Ts and dot your Is, however, or you'll be setting
yourself up for some major legal issues in the future.
With that said, there are some legal documents that are more important, because they're more
likely to cause problems if you don't have them, than others. I'm not a lawyer so you
should consult a qualified attorney about all of your legal questions, but 3 legal documents
that every single entrepreneur absolutely must have to keep his or her bases covered
are an ownership agreement, worker agreements, and customer and vendor or supplier agreements.
The ownership agreement may take a number of different forms such as a shareholders
agreement or partnership agreement depending on your business, but you must have one if
you there is more than one person with any ownership rights. You have to make it crystal
clear, in writing, who owns what, who controls what, who needs to sign off on what, who has
contributed what, who will be paid what, etc. before you get up and going. This is basically
the business equivalent of pre-nup and, just like with a nasty divorce, if you end up in
conflict with a co-founder or other co-owner and this agreement is not in place, you will
waste an immense amount of time, money, and energy working things out after the fact.
Worker agreements - whether with contractors or employees - must clearly specify the duties
and responsibilities, timelines, payments, and any other details related to your relationship
with the people that work for you. Make sure you're in compliance with all labor laws and
that you're properly identifying employees as employees and contractors as contractors...if
you need help distinguishing between the two you can check out my earlier video.
Customer and vendor or supplier agreements lay out all of the terms and conditions for
the relationship between you and any organization that you purchase from or anyone who purchases
from you. Depending on your business the customer agreement may be a standardized terms of service
type agreement or it may be an actual contract signed by each new customer. Vendor or supplier
agreements are likely formal and should include protections for you if the vendor fails to
deliver or if there is any issue with the product. In any of these cases, exactly what
the buyer gets, when the buyer gets it, how much it costs, what the payment terms are,
what happens if something goes wrong, and any necessary protections should be included
as well as any other items specific to your business. If you're not sure what's needed,
speak with a lawyer who is experienced with that type of agreement in your industry.
Putting the work in to get these 3 legal agreements in place upfront will turn out to be invaluable
protection for your budding business later on, so don't sleep on any of them. The small
extra time and money commitment will surely save you major stress later on.
Now I want to hear from you. Do you have experience with one of these agreements saving you in
a sticky situation or a lack of one of these agreements biting you in the butt. What other
legal agreements do you think are absolutely necessary for all entrepreneurs to have? Let
me know in the comments below.
Did you find this video helpful or interesting? If you liked what you heard or you think someone
you know could benefit from this discussion, please like and share.
And don't forget, if you need help planning, launching, or growing your business there
are tons of resources for you over at catecosta.com.