Practical Tips on Must-Have Documents for Employers and Business Owners with Partners!

Guest Terry Madigan gives practical tips on legal documents that should be in place to prevent heart ache and pain when separation happens with business partners, employees or in a business transition situation. Check out this episode for nuggets of knowledge from long-time Tallahassee attorney, Terry Madigan.

This show does not provide legal advice and Provider is not a law firm.

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Top 10 Legal Documents For Small Businesses
LINKILAW JANUARY 22, 2018 LEGAL DOCUMENTS
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Top 10 Legal Documents For Small Businesses
So, you’ve got the idea and are all psyched to get going! But one thing holds you back every time you try to get the ball rolling; where do I start? do I have all the right documents to ensure I have a working business?
These are the 10 most important legal documents for small businesses:
1. Memorandum Of Understanding
When you are ready to start your own business. The very first thing you need to do is to ensure that you and your business partners are committed to a common course of action. A memorandum of understanding, although not legally binding, is the first stage before a formal contract. It is a way of solidifying a deal and is often used to make sure all parties are on the same page. This document establishes your intentions and will spell-out the essential terms of your agreement.
A memorandum of understanding will also help ensure that expectations are aligned between business partners. It makes clear what you can and cannot expect from one another.
2. Memorandum Of Association & Articles Of Association
When your business idea is on track it is time to officially set-up your business. You will need a Memorandum of Association and Articles of Association, both of which are essential founding legal documents for every business in the UK.
The Memorandum of Association sets in stone your intention to form a company, while, the Articles of Association establish the rules about running and owning it. They also define the purpose of your business as well as the basic rights and obligations of directors and shareholders.
Both are standard legal documents and may be easily amended to add any provision that you may wish to include to better reflect your vision. Don’t worry about getting these drafted by a lawyer from the very start, because, when you incorporate a private limited company in the UK, you will automatically be provided with model articles.
3. Shareholders’ Agreement
The most important legal document for any business regardless of size; is the Shareholders’ Agreement.
To ensure the smooth running of your business, a well-drafted Shareholders’ Agreement is required to outline the relationship between shareholders and to establish their respective rights and obligations. Among other things, it defines each party’s proportion of shares, profit sharing and the company’s decision-making procedures. Without one, in the event of a dispute or simple doubt you will have to rely on the narrowly-drafted constitutional documents, namely, the Memorandum of Association and Articles of Association (see above).

A Shareholders’ Agreement serves the purpose of safeguarding shareholders’ interests in various circumstances. It allows you to protect your investment in the business by including clauses that force shareholders to sell their shares back to you in certain sets of circumstances.
4. Non-Disclosure Agreement
A non-disclosure agreement creates a trusting relationship between the signatories. You may use it to protect any kind of information that you may want to share but wish to remain confidential.
It is always useful if your business involves an innovative idea or know-how. This legal document is also commonly used when presenting a new idea or product to investors, or when dealing with third parties i.e. contractors, distributors.
If you do not have a non-disclosure agreement in place, you may risk losing your intellectual property rights to your product and brand name. The people or businesses you share your business ideas with, may share them with others, or even implement them themselves. You may as a result be exposed to competition and face information leaks that could lead to loss of potential investment opportunities.

6. Employment Agreement
Needless to say that once your business starts expanding you will need an Employment Agreement for any new recruits. An Employment Agreement will specify the employee’s role but most importantly, it will limit the employer’s liability.