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Legal agreements start-up companies need from the get-go

When a person in Moorestown sets off to start their own business, there are a lot of steps in the process beyond securing a location and deciding on a business name. In most cases, certain types of business agreements can be essential to have prior to starting any new business venture.

First of all, if you are starting a new business with another individual, no matter whether it is a simple partnership or a more complicated corporation, there should be an agreement in writing between all individuals who will be owning the business. Depending on the business type, these could include partnership agreements, founders' agreements, shareholders' agreements and operating agreements. These types of agreements set the parameters of the business in place, allowing the business owners to focus on their enterprise. In some ways, these agreements are like prenuptial agreements. They determine who owns what percentage of the business, what capital contributions and salaries will be paid and they can even contain provisions regarding how to handle the break-up of the business if the business owners decide to leave the venture.

Following that are employment agreements involving employees and independent contractors. It is important to have these agreements in place before the individual begins working for you. This way, standards, deadlines and terms of payment can be established from the get-go, avoiding the problematic litigation that could follow if such an agreement did not exist and a dispute arose.

Finally, we have agreements involving customers, vendors and suppliers. Of course, in any business, whether it is a brick-and-mortar store or an online venture, customers are the main source of revenue, and vendors and suppliers are needed to fulfill the customer's needs. For example, when it comes to online sales, having agreements outlining privacy policies and the terms of service can be necessary. Moreover, when it comes to vendors and suppliers, indemnification and exclusivity agreements along with any limitations there will be on either party's liability may be necessary to avoid legal snafus down the road.

As this shows, business formation is more than just having a dream. There are many legal details that need to be attended to. Having the assistance of an attorney can help new business owners make sure they have all their legal documents in place before opening their doors to the public.

Source: Entrepreneur, "3 Agreement Types Every Entrepreneur Needs," Chas Rampenthal, Dec. 6, 2013

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