It might be enticing to close a deal with a firm handshake or just by word of mouth. Being a business owner is already a challenge handling day-to-day issues such as replying to emails, attending meetings, and giving your employees their duties. You just don’t have time to do much more in a day’s time.
However, an important key factor for running a business is to have proper documentation for your business and solid legal protection in case something arise. Below are three common legal contracts/agreements you should draw up for your business. There are many websites and legal professional that you can seek to customize your contract for your needs.
When you are starting or running a business with someone else, you need some kind of agreement in writing. It can be with your best friend, spouse, or even your parents; you still need it. By having a partnership agreement from the start, it can be a helpful to determine the expected issues that come up during the course of running a business.
The partnership agreement should contain the following:
- Define who provides what:Discuss what you and your partner will be bringing to the table in terms of labor, time, cash, property, customers, etc. Who plans on working on the business full-time, part-time or just acting as a silent partner?
- Define who gets paid what:Outline how profits will be distributed. Will each partner be paid a salary for his or her role in the business? How much? What about any extra profits for the year?
- Define how decisions get made:What type of decisions require unanimous votes, and what type of daily decisions can be made by a single partner? Discuss these matters upfront and decide what decision-making structure will let your business run the most effectively while making sure that no one feels left behind.
- Define what happens to ownership interests:Decide what happens if/when someone dies, retires, goes bankrupt or just wants out. Maybe add in a non-compete clause to protect against a partner leaving, taking your customers and setting up a competing business.
2. Non-Disclosure Agreement/Confidentiality Agreement
Whenever you’ll be sharing your company’s proprietary information with somebody, you should ask them to sign a non-disclosure agreement (NDA). This is key in doing business today and for me. I speak with lots of clients that share their ideas with me and who I share my ideas with. There are times during meetings that we tend share secrets and information that should not be shared with others. Make sure to have a NDA on hand when you will be having meetings.
You can download a nondisclosure agreement template from this site by clicking HERE.
3. Independent Contractor Agreements
By being in the graphic design industry, outsourcing to independent contractors is a great way to get some added help. I outsource things such as bookkeeping and other vital task to make my business run successfully. It is great to have an independent contractor agreement. It should explicitly define the relationship between you and the worker. Make it clear that you intend the worker to be an independent contractor who is responsible for his or her own taxes. Be upfront with what you expect.
It is important to invest time when researching these 3 agreements. Make sure that each states clearly what the contract/agreement includes. Talk to an attorney if you have any questions at all or just want a professional set of eyes to review a contract. You and Your business is worth the investment.
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