The Worldwide Boom in New Business Startups – Are You Prepared Legally?
According to the website Quora.com, in the United States alone, approximately 3 million new businesses are started each year – and by extension, that means that worldwide, as many as 50 million new business startups begin operations in a single year! Perhaps you are planning on being one of those new startups?
While most people planning a new business startup give serious consideration to their business location, supply chain, securing the right employees, and the like, many give little or no thought about what legal documents they will need. This is a BIG mistake, as not having the right documents in place can sink your business from the beginning. And not just startups — even if your business has already started operation, you should make sure that you have the proper legal documentation in place.
Of course, depending on the type of business being established, many different kinds of legal documents could be needed. But what are the core legal documents that every business needs? This should be your first priority to secure. Below you will find a shortlist of some of these “must-have” business documents.
An Industry-Specific Business Plan. Most business startups need to secure funding – and you are going to need a business plan (which outlines the business opportunities in the industry you are targeting, and includes a detailed description of your plans to grow the business). Banks and investors will want to see this, so have it ready to share when you approach them.
Operating Agreements. While not necessary for a sole proprietorship, for LLCs of any type you should have a document that details the structure of the company, including members, managers, their duties and lines of authority, voting, and division of profits/losses. Your by-laws may also detail how to handle certain business situations, such as right-of-succession in case of the death of the CEO or who will make decisions about offering stock or dividend payments.
Official Meetings. These meetings must have recorded minutes – an official record of who was in attendance, votes taken, and decisions reached.
Employee-Related Records. Of course, you will need to prepare (and maintain) the necessary payroll and HR (Human Resource) records, non-disclosure agreements, and signed employment contracts where they have been used.
Website-Related Documents. These should be posted on your website as pages in their own area. One important document to develop (and post online) is your TOS pages. This is your business/website terms of service. Your TOS should outline specifics about the services you are providing, refund policies, how disputes will be resolved, and necessary industry disclaimers. Another important document to post on your website is your privacy policy. This should detail what information you are gathering on your customers, why you need it, and what use you will be making of it.