The Legal Documents Your Startup Needs to Get Started
Coming up with a startup idea is one thing, but establishing a legal business in the US is another. No matter what your goals are, it's generally a good idea to incorporate your company in order to minimize liability, reduce your tax burden, and make sure your business can operate compliantly.
In this article, we'll go over the key legal documents startups need in order to launch, run, and grow in the United States. Note that some requirements vary by state or depending on the type of business you choose to incorporate. Check out our LLC vs. C-Corp guide for more information about the two most common structures.
8 legal documents your startup needs
1. Constitution
A constitution is a document that establishes the rules and regulations under which an organization will operate. The founders of an organization typically create a constitution, but it can also be amended as needed by the board of directors. The purpose of a constitution is to create a structure that allows an organization to achieve its goals while protecting its members from liability.
The legal documents that comprise a company’s constitution are typically divided into three categories: articles, bylaws, and resolutions. Articles are generally used to describe the purpose or mission statement of an organization, while bylaws contain the rules and regulations that govern how members should conduct themselves within the organization. Resolutions are often used to approve significant changes to an organization’s operations or new projects for which it will take responsibility.
2. Articles of Incorporation
This document outlines how your company will be organized and managed financially, as well as what its purpose will be. If you plan on incorporating your company, this is something you’ll need to file with state or federal authorities before launching operations.
3. Intellectual Property Assignment Agreement
An intellectual property assignment agreement is a contract signed by the owner of the intellectual property and another party in which the former assigns their rights to the latter. Intellectual property can be any legally protected asset, including copyrights and trademarks. As with any other legal document, an intellectual property assignment agreement should be drafted and signed only after carefully considering all parties’ needs and interests.
4. Bylaws and Operating Agreements
An operating agreement is a formal contract between shareholders in a company that contains information about their rights, responsibilities, and relationship with other shareholders. An operating agreement may also include information about how decisions are made and what happens if there is a conflict among those involved.
The purpose of bylaws and operating agreements is to clarify what each party expects from the business relationship. They can help eliminate confusion over who’s responsible for what duties, who have specific decision-making authority, how disputes will be resolved, how profits will be distributed among shareholders/owners, etc.
5. Non-Disclosure Agreements
A legal contract that requires the signer to keep certain information private. A non-disclosure agreement can be used for various reasons, but it’s most commonly used in business when two parties have agreed to exchange sensitive information and want to ensure that it remains confidential.
6. Employee Contracts and Offer Letters
An employee contract is a legally binding agreement that outlines the terms of employment between an employer and an employee. It includes details like how long the contract will last, what salary will be paid, whether bonuses are provided or not, and any other benefits that may be included. This is one of the most important documents you’ll need for your business, so make sure you write it with care!
An offer letter is basically a summary of the employment contract; it’s usually sent out before you sign on the dotted line. It outlines all of the same details as an employment contract. Still, it doesn’t have as many legal implications if one party decides to back out before signing anything official.
7. Shareholder Agreements
A document used to establish ownership, voting rights, and management responsibilities for a business. The document is typically created when there are multiple owners of a company, such as an LLC or corporation.
8. Stock Purchase Agreements
A legal document that outlines the terms of a transaction between a buyer and seller of a company’s stocks. It includes information about the price and number of shares being traded and specific details about what the buyer is purchasing.
As we focus primarily on tech companies, we’ll also note that tech companies also need an IP Assignment Agreement and an Intellectual Property Assignment Agreement, among other tech-centric agreements like Statutory Books, Technology Assignment Agreements, and Invention Assignment Agreements.
Legal compliance is a never-ending process
While this list will prepare you for the most common documents for early-stage startups, the truth is that compliantly running a US business requires constant documentation and attention to detail. Falling behind at the beginning will only make it more difficult to get back on track later on.
With that in mind, it's critical to keep all legal documents safely filed and easily accessible when needed. Our ongoing compliance guide has all the information you need to monitor your compliance obligations as you continue developing your business.
Start your incorporation now
At Firstbase, we help businesses incorporate their business in a multitude of countries. While we specifically target the tech industry and startups, we’re helping all founders who need assistance with legal documentation and navigating the incorporation process.
On top of the initial incorporation, we also provide comprehensive compliance services including reminders and automated filings for annual reports, franchise taxes, and other vital documents. Click the button below to start your incorporation and put your US business on the right track.