As a small business owner, paperwork can sometimes feel like the bane of your existence—but in fact, the right paperwork protects your business legally. Aside from the founding documents filed with the state defining your business as a corporation, limited liability company, limited partnership, joint venture or the like, every small business should have a basic set of documents in place to define relationships with business partners, clients, vendors and employees.
Unfortunately, many small companies don’t have all (or sometimes any) of these documents. Let’s run down a quick list of the most essential documents you should have to keep your business functioning smoothly.
Shareholder/Member Agreement
Any business that has more than one owner, partner or investor needs some form of shareholder agreement that specifies who owns what, who is responsible for what, and how the various owner/partners will work together. Businesses without this documentation are a breeding ground for sticky, time consuming and expensive lawsuits, particularly if they break up, or someone dies or divorces.
Employment Contracts/Independent Contractor Agreements
Whether you hire employees, utilize independent contractors or a combination of these, you need paperwork that clearly outlines the scope of these relationships—including company expectations (think: employment policy manual---see below), employee/contractor responsibilities, deliverables, terms of payment, etc.
Vendor Agreements
For any third-party individual or company providing supplies or services to your business, you need a vendor agreement that defines those business relationships, including what is being supplied (with a due date), what you will pay, terms for settling disputes, and so on. Sometimes this is supplied by the vendor, in which case, you should have your attorney review it and mark it up as necessary. If not supplied by the vendor, then furnish one that is favorable to you.
Employment Policy Manual
In addition to an employee contract which you should have with each member of your staff, you should also have an employee manual that details company expectations as well as the general rights and responsibilities of your employees. This manual becomes the standard frame of reference—the “go to” document—to expeditiously resolve disputes and enforce policy.
Reviewed Lease Agreement
If you lease either office or workspace, you should have a lease agreement with the owner/landlord. These leases, often of the “triple net” variety, can be tricky to navigate and often contain terms that are detrimental to the tenant. That’s why it is extremely important to have these documents reviewed by an attorney before signing. If you’ve already signed a lease agreement, have it reviewed to identify weak areas that may support a renegotiation of terms more favorable to you, either now or in the future.
Building Purchase Document
A title company closing the deal is not enough to protect your interests, especially if you are the buyer of the new building. The title company is there to sell title insurance, and usually to close the deal on terms favorable to the seller. Again, it’s important to have your attorney look at the purchase agreement and point out any errors or unfavorable terms. You will be amazed at what you find.
Other Documents
Depending on the nature of your small business, you may need additional legal documents above and beyond the basic list described above.
All shareholder or member agreements … employment or independent contractor agreements … vendor agreements … employment policy manuals …. lease agreements and purchase documents … should be prepared and reviewed by counsel to ensure that they are up-to-date, properly formatted, and favorable to your business interests.