One of the most common questions business owners want to know is what kind of legal agreements they need. And while the answer to this question depends a lot on what kind of business you operate, there are four key legal agreements that virtually every business owner will need to protect and operate their business legally:
If you are in business with another person, it doesn’t matter if your business structure is a partnership, an LLC or a corporation – you will need an owner agreement. These can take the form of a partnership agreement, an operating agreement, a founders’ agreement or a shareholders’ agreement and details how ownership in the company is being distributed, compensation, capital contributions and other operational issues – including what happens if someone wants out.
These agreements set the rules for how your relationship with employees will be governed and should also be used to cover independent contractors. Having an employment agreement for everyone ensures that expectations for job performance are spelled out and what the grounds are for termination.
Every business needs formal agreements with vendors and suppliers that help ensure the needs of the business are being met as agreed upon. Issues of exclusivity, indemnification and liability limitations all need to be set form in your vendor agreement to protect your business against claims where a supplier is at fault.