Opening a business can be considered an important milestone in the field of entrepreneurship. While many considered starting up a business an overwhelming experience, opening a small business often involves a straightforward process. The keys to making your new business successful are careful planning, informed financial decisions, and completion of the proper legal documents.
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Importance of Legal Documents
In the business world, obtaining and securing the appropriate federal and state permits, licenses, and identification numbers are crucial in establishing a business organization and prevent the likelihood of paying penalties and fines, or worst the closure of your business even before it has taken off. Keep in mind that legal documents are highly critical in protecting your business interests over the course of time. And while there are a lot of legal documents that you need to secure before you can open up your business, it is important to use business checklist templates to keep you organized and on the right track.
In this article, we will provide you with a rundown of the important legal documents you will need to secure before opening a business establishment.
Business Documents You Should Have
- LLC Operating Agreement – This type of document provides an outline of a limited liability company (LLC) on its financial and functional decisions. The LLC operating agreement shows how the company or organization makes decisions crucial for the business, the distribution of the profits and losses, the responsibilities and rights of its members, and how the organization address when someone wants to discontinue their services.
- Non-Disclosure Agreement (NDA) – Also known as Confidentiality Agreement (CA), this type of legal contract that is usually signed by two or more parties. This document shows a summary of confidential materials or information shared exclusively between the contracting parties for a specific purpose. It serves as a protection of the confidential information and trade secrets that are essential for the confidential relationship between two parties. Use the following non-disclosure agreement templates as your reference in drafting your own or you can take a look at the sample templates provided below:
- Business Plan – Although a business plan is not considered a legal document, every business owner should be able to write one for their business organization. Writing an effective business plan is essential in securing funds or capital from a prospective investor. Many marketing experts viewed a business plan as a blueprint because it shows the investors what are the plans you have in mind to make the business successful and how you are able to achieve it. This document commonly covers the objectives, strategies, financial, sales, and marketing forecast of the business.
- Employee Agreement – In order to prevent future misunderstanding between the employer and its employees, an employee agreement is used to determine the set of obligations and expectations between the two parties. Using employee agreement templates, you can set a contract that will prevent an employee from leaving the company too soon. Take a look at the following examples:
- Employer Identification Number – Issued by the Internal Revenue Service (IRS), this form of legal document is used as a fundamental business tax ID. It is one of the most crucial legal papers to secure when opening a business.
- Memorandum of Understanding (MOU) – Although it is not considered to be a legal document, every entrepreneur should take this the Memorandum of Understanding seriously. It is a nonbinding agreement between two or more parties expressing a union of will intended for a similar line of action. This document is a form of gentleman’s agreement. You may want to check out this collection of memorandum of understanding templates and use them as your reference in writing one for your company and the other party whom you are looking forward to working with. You can take some ideas from the sample templates found below:
- General Partnership Agreement – If you are a newbie entrepreneur who is looking to open a startup business, it is a smart idea to find someone to share the responsibilities, especially in terms of finances. However, there will always be a slight possibility that certain issues can arise between the business partnership. To protect the business, you will need a general partnership agreement so that everyone who is involved in the partnership understands the terms and agree to them before you start opening the business. If you are looking for professional references, download our collection of sample general partnership agreements or check out the templates that are found below:
- Non-Compete Agreement – Due to the cutthroat competition in the business world, more organizations are requiring new hires to sign a non-compete agreement to protect the confidential information of the business. This type of legal document restricts an employee from working in a competitor company within a specified location and length of time. Feel free to use our sample non-compete agreements or see the sample templates below:
Whether you are running a small or big business, a limited company, a general partnership, or a major corporation, securing all the legal documents stated above is highly beneficial when opening your business. Having all the right legal documents in place can protect your company from potential expensive lawsuits or other problems that are usually throw off new business off the right track and even before they secure a strong foothold in the market. Furthermore securing all the legal documents is a smart way to comply with the different federal and state regulations and prevent you from facing disputes that can be disastrous for the overall well-being of your organization. If you want to download more professional business templates, make sure to browse our vast library of templates which are available for free download.