When starting a new business, we know that there are a million and one things on the to-do list. But one that should be much higher up your list than it probably is should be dealing with legal documents. Although for most companies this act is more on the dreary side, it’s an important aspect of getting your startup up and running smoothly. While other tasks on your list may be more exciting, getting your paperwork in order will be the best way to protect your investments and start off on the right foot. Having the correct agreements in place as early as possible is crucial.
But where to start? We’ve put together a shortlist of 6 key legal documents that your startup will need.
1. A Standard Employment Contract
In the UK, an employer must provide an employee with employment terms within the first two months of that employee’s start date. This is known as a “statement of terms”. This is actually just the bare minimum required by law, and doesn’t provide protections for employers as well. An employment contract (rather than just “terms”) is a better option for both sides, with comprehensive duties, responsibilities, and outcomes. Generally a standard employment contract includes information like start date, job description, hours and place of work, probationary period information, salary and deductions, holiday specifications, sickness, disability and pension information, how long a notice period should be, and more.
2. A Shareholders’ Agreement
Generally the directors of a company are the ones responsible for daily management of their business, particularly in a startup environment. However, if there are shareholders involved, there are a few areas that have to be referred back to them for a decision. This document provides for those situations. They aren’t required by law, so they are often omitted, but if you’re the director of a business with more than one shareholder, or you plan to grow, this is one you shouldn’t skip.
3. A Non-Disclosure Agreement
Commonly referred to as an NDA, this document is really just a confidentiality agreement that gives secret keeping a legal aspect. An NDA creates a legal obligation to privacy and makes it so that those who sign it agree to keep any specified information top-secret – whether it’s a business model, plans for a new type of tool, or information about clients and customers. NDAs protect sensitive information, and if that sensitive information gets leaked to the public, the injured party can claim breach of contract. This will be particularly important if you’re bringing something new to market.
4. An Intellectual Property Checklist
Here begins the checklist section of our list, starting with the intellectual property version. When it comes to small business, particularly in the tech sector, an Intellectual Property (IP) checklist will cover some of the initial considerations that come to mind in terms of setting up your business. You’ll find a general overview of a variety of issues, including patents, brands, trademarks, confidentiality, user-generated content, consumer protections, etc, and you can deal with them accordingly.
5. A Tax Checklist
Our second checklist is for tax. The tax checklist should cover some of the initial considerations that relate to tax and a startup business. It includes the types of registrations that a business and/or individual may need to make, such as telling HMRC your company is ‘active’ for corporation tax, and registering your company for PAYE.
6. A Health and Safety Policy
It’s England, after all! If you have five or more employees, a written health and safety policy is required for your business. By having one, you demonstrate your responsibility as an employer, and you will also be giving staff added confidence, proving that you are providing a safe working environment and are keen to protect them from injury and you from liability.