Home Top 8 legal documents every startup should consider getting

Top 8 legal documents every startup should consider getting

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Legal documentation is always the last thing on the mind of startupreneurs. With so much energy put into idea development and funding sources, there’s really no time to focus on trivial matters like non-disclosure agreements or employee contract letters.

Truly, no one can blame you for not paying attention to things like that.

But one thing you don’t want to do is ignore the legal side of your business. Right from the get-go of your idea launch, you must start looking into the legal requirements you need to meet.

In case you don’t know what those are, below are some important legal documents startups need.

1. Non-disclosure agreements (NDA)

Before you even begin the process of signing funding papers or hiring employees, you need to ensure you’ve already prepared a non-disclosure agreement paper.

This is a document that ensures the confidentiality of your company. In other words, it protects your business ideas, unique selling propositions (USPs), plans, and intellectual properties from being leaked by anyone you’re partnering with, hiring, or getting investments from.

Say you sign this agreement with a potential investor; such a person is bound by law to not reveal anything confidential about the business to a third party.

The legal entity identifier, or LEI for short, is a relatively new legal concept that’s starting to make the rounds lately. Regarded as the new way of verifying business identities, LEI helps people from around the world check and confirm the legitimacy of the business they’re dealing with.

Although initially intended for businesses dealing in financial transactions and trading assets, LEI is now considered a great piece of legal document that every startup should have.

More like a global registration number, the LEI Legal Entity Identifier is a system of international registrations that puts brand names on a global database backed by ISO standards. With it, anyone can look up a brand and see how reputable and legitimate the brand is.

As a startup, it is imperative to get the LEI application certificate even if you don’t deal directly in financial assets. This is because of the level of respect and reputation it helps your business command.

Additionally, it may be hard for you to secure funding from some top international banks, credit unions, and investors without the LEI number certificate.

3. Founder’s agreement

The founder’s agreement is essential in the instance of multiple founding members. If your startup is the type that involves multiple founding parties, it’s a good idea to have a written agreement that defines the working relationship of all parties involved. This will act as the basis upon which decisions are made, and boundaries are set.

4. Shareholder agreements

Like the founder’s agreement, it is also important to cater to a legal documentation that backs any agreement you have with the investors you’re bringing in.

This is because you don’t want to run into arguments or conflicts with your investors in the future. The basis of these agreements is what will set the tone for the decision-making process of the business. That way, every shareholder will understand where they stand and how far their influence goes. And in case anyone decides to leave, they can do so in line with the pre-existing agreement.

5. Employee contracts

Even if you start your startup all by yourself, it’s expected that you might need to hire more hands to support you after a while.

In this case, it becomes imperative that you have a written agreement on the expectation you have of your employees.

For starters, you want to have an employee contract that contains the following important details:

  • Company rules and regulations
  • Expectations based on job position
  • Terms of employment. This may include compensation, working hours, conditions of termination, extras, etc.
  • Ownership of work
  • Non-disclosure statement

 6. Articles of incorporation

Before you even think of serving your first customer, you must file an article of incorporation with your local Internal Revenue Service. This is to form a distinct legal entity for your business.

In other words, you want to make the internal revenue agency understand that your business is an independent entity on its own and that its funds, liabilities, and taxes are solely borne by it.

So in the event of taxes, debts, and other financial burdens, the business finances will be handled separately from your personal finances.

We’ve seen many instances where startup owners failed to file for this certificate. And as a result, they ended up paying for the business’ legal liabilities from their personal savings.

You don’t want your case to be like that.


Bylaws are a set of laws that guide the daily operations of a business corporation. Unlike other documentation that involves external third parties, bylaws are simply between the entities of the organization. That is the staff, shareholders, managers, executive heads, etc.

The essence of bylaws is to create a framework upon which important business decisions will be made in the future. For instance, a bylaw could comprise of frameworks like:

  • How to settle disputes
  • How to select leadership
  • The pattern or criteria for determining the rights and powers of shareholders.
  • Voting thresholds for approvals to certain actions.
  • Criteria for accepting new shareholders
  • Conditions for securing departmental or executive heads.

8. Website terms of use

It is no news that the world has gone digital. As it is, almost every business out there today has a company website. To make sure you don’t incur legal liabilities on how people choose to use your company website, it’s important to create a website Terms of Use Agreement.

This is a piece of contract that acts as a form of agreement between the company and the site users (regular visitors and potential customers).

Amongst a list of things that should be discussed on this type of agreement includes:

  • How the site can be used
  • Disclaimers
  • Privacy policy
  • Copyright protection warnings, etc.

Story by Uday Tank



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