3 Contracts Your New Business Needs
One of the most important things a start-up business can do is to protect itself legally. The best way to ensure that you do this is to work with a knowledgeable business attorney. While no two businesses are the same and each has its own unique needs, below are three types of written agreements that you should consider having in place to protect your start-up company:
- Owner Contracts
If your business has co-owners, it is imperative to have a written agreement signed by all of them. An ownership contract sets forth ownership percentages, salaries, capital contributions and other important matters. It memorializes the “deal” struck between the owners and negotiated while everyone is on good terms. This type of contract is necessary regardless of what type of legal structure you have chosen for your business. Common examples include operating agreements for an LLC, shareholders agreements for a corporation, and partnership agreements between partners.
- Employee/Worker Contracts
Many business owners use an employment contract for their employees, but they fail to use them with third-party workers such as independent contractors. This can lead to serious negative consequences because many times an independent contractor may have access to your company’s confidential information stored on your network or databases, as well as in your filing cabinets. Having a written contract that specifies the worker’s job to be performed and includes a confidentiality agreement can provide you significant protection. It is important to note, however, that you should consult with an attorney to verify that you are not treating your independent contractors like employees, because improper classification can result in severe penalties that are strictly enforced.
- Vendor Contracts
If your business requires you to depend upon vendors and suppliers, it is essential to have a contract that protects your best interests. For example, if a vendor must perform in order for you to meet your customer’s needs, you need a contract that sets forth legal protections if the vendor fails to perform. Depending on your industry, you may want to consider having a contract with your customers as well.
There are several other types of agreements that may be beneficial for your specific business, but the three contracts listed above provide you with a good starting point. To learn more, contact us for a consultation.
At Nielsen Law Group, we will not only help assist with what is the best structure for your business, but will also aid with the additional details that will foster a strong foundation and get you started on the road to success. Whether you need assistance in forming your new business entity or establishing a more sophisticated corporation or non-profit organization we will be able to guide you the entire way. You can schedule your initial consultation by calling (480) 888-7111 or submitting a web request here.