4 Must Have Agreements… Every Start-Up New Business Needs

Thinking of starting up a new business? Now is not the time to take short-cuts. When starting up a new business, putting the appropriate legal agreements in place is crucial for protecting your business and personal assets. Yet it’s common for many new business owners to put off—or even entirely ignore—creating these initial, critical agreements. You might not even know which documents are most needed. 

These 4 agreements are among the most essential legal documents for all start-up new businesses. If your start-up new business is missing any of these 4 important documents, you and your new business will not be protected…, and you may not even get paid! 

1. Business Entity Agreements 

One of the first decisions to make as a start-up new business is what legally structure you will use for your business. To minimize your personal liability and maximize tax savings, we often advise clients to set up their business as a Limited Liability Company (LLC) or a Corporation. In either case, you’ll need to draft the proper business entity agreement to stipulate how the business entity will be governed and run. 

For an LLC, the document that establishes how the LLC is run is called an “operating agreement”. For a Corporation, the document is called “corporate bylaws”. Both of these legal documents define the rights and responsibilities of the business owners. Business entity agreements establish the provisions for running the company and in the event the business owner dies or becomes incapacitated. These business entity agreements even set out what happens if the company is sold or someone wants to invest in the new business. Additionally, new business entity agreements outline how business disputes will be resolved by the new business. 

“I Don’t Need These Documents Yet.. I’m Just Getting Started”

I’ve frequently heard new business owners claim that they don’t need to spend the time and small investment to have these documents drafted. Many start-up new business owners are related family, personal friends, or maybe former business associates. That’s why start-up new business owners think that they can just work together and simply figure everything out as they go. Don’t make that mistake! You’re now a new business owner, and your business requires structure.  And, don’t forget… you have to protect your investment…  your start-up new business idea. 

Conflicts are inevitable in any business, and even if everyone gets along, you still need to plan for events like the company’s eventual sale or dissolution, as well as incapacity, death, or retirement of an owner. For this reason, you should always consult with an experienced business attorney.  At The Mendez Law Firm, we’ve been representing business owners for over 34 years.  We’re experienced at tailoring your start-up new business agreements to fit your business needs.  Never try to draft these business agreements on your own.  A generic, online document service claiming that their business agreements “fit all” businesses will not be tailored to your business.  it’s like going to a doctor, and getting prescribed the same pill that every other patient gets… regardless of their medical condition!  

We can advise you on the entity structure that’s right for your business and create tailored operating agreements or bylaws for your specific business to cover your company’s specific start-up needs. 

2. Employment Agreements 

If you anticipate hiring employees, you should consider having all employees sign an employment agreement or at least a written description of the job being filled and the expectations you have for that employee. If you will not be hiring employees, but will use independent contractors, we urge you to have an independent contractor agreement for each contractor. Remember, every person who works for you must sign these documents… no matter how long you’ve known the person you are hiring. These documents clearly detail the terms and conditions for the working relationship, so that your new business employees or independent contractors clearly understand what’s expected of them. 

These employee agreements and/or independent contractor agreements should also include provisions that protect your intellectual property (IP). All the time, we see agreements that put business owners at risk of their employees or independent contractors leaving and taking the company’s most valuable assets with them. Sometimes they can steal customers, or in a worst-case scenario, they may even own the IP you’ve paid them to create for you. 

3. Intellectual Property Assignment Agreements 

Intellectual property (IP) agreements are a must for computer software and other intellectual property (IP) that you’re selling in your start-up new business, as well as any IP created and developed by the start-up new business owners, its employees, and contractors. IP agreements establish that once the business is up and running, is owned by the company, not the individuals. Transfer of IP ownership is accomplished using intellectual property assignment agreements. 

Whether included as a clause in the employment agreement or created as a stand-alone document, these agreements “assign” the company ownership rights to all intellectual property assets— patents, trademarks, and copyrights—used by your business. These agreements are especially important when working with independent contractors. Although you typically have automatic ownership of IP produced by your employees while working for you, contractors generally retain full ownership rights to their work, unless they’ve signed an agreement stating otherwise. We can help you create proper IP assignment agreements for everyone involved with your business, so you can retain total ownership and control of your IP assets. 

4. Sales and Service Agreements 

What many business owners don’t understand is that your new business invoice, service agreement, or product purchase agreement is a must-have to protect your business… and get paid on time too! 

Whether you sell products, provide professional services, or a bit of both, you should have legal agreements in place clearly describing your product or service, your payment and credit terms, the warranties you intend to offer, and even adequate legal provisions to protect you and your new business. 

Don’t Do It Yourself 

You want your start-up new business to succeed. You’re putting all of your heart and soul into it. So treat your start-up new business like the business professional you are. Don’t do it yourself. And never rely on generic, fill-in-the-blank documents found at many local business supply stores, or even online. This is exactly the time that you need an experienced, start-up new business attorney to work with you to create your tailored business agreements.

At The Mendez Law Firm, we’ve represented start-up companies and new businesses for over 34 years. And we’re a local business law firm located right here in your neighborhood… the East Orlando area. 

Whether you need start-up new business agreements created, or just need to review the documents you already use in your business, call us. We look forward to working with you to help your start-up new business to succeed! 

Your East Orlando Start-Up New Business attorney can help you protect your new business idea. Call The Mendez Law Firm at (407)380-7724 or email us at mail@themendezlawfirm.com  . Your Start-Up New Business consultation is FREE, and there is NO obligation. 

The Mendez Law Firm… conveniently located in the East Orlando area. Call The Mendez Law Firm TODAY at (407)380-7724 or email us at mail@themendezlawfirm.com to schedule your FREE Start-Up New Business consultation. Copyright © 2020. The Mendez Law Firm, L.L.C. All rights reserved.