Our friends at the YEC asked 8 entrepreneurs to share the most essential legal documents every startup needs to be successful. Here’s what they shared:
“Many conversations will need to begin with a signed NDA on file. It’s ideal to have this document ready to go for any unanticipated developments to protect the privacy of your company and ideas.”
— LISA NICOLE BELL of Inspired Life Media Group
Assignment of Intellectual Property
“Every person who works in any manner for the company, including the founders, should execute an agreement assigning all intellectual property they create to the company. Especially during the startup phase of a company, almost all of the value of the venture will be tied up in the intellectual property being created — i.e., without having a legal title to the IP, the company is worthless.”
— PETER MINTON of Minton Law Group, P.C.
Ownership of Assets
“If you have any kind of contributors who are unpaid (or freelance), make sure there are legal documents that stipulate what both parties can do with the contributions. Better sooner than later!”
— DEREK FLANZRAICH of Greatist
Strategically Thought-Out Bylaws
“A company’s bylaws provide the legal backbone for how it operates. If your company does not have bylaws in place, the state statutes will control how the company is run. It is much better for business owners to strategically think through how they would like their companies to operate than to rely on the state’s statutes, which might not always be the best fit for the company.”
— DOUG BEND of Bend Law Group, PC
Employee Contracts or Offer Letters
“Having a strong contract or offer/acceptance letter with employees is essential to make sure that the employee is tied into the team and their exceptions. This should state the terms of employment and who they report to, ownership of work, expectations, required commitments, share vesting and all other “rules” the employee must abide by. This prevents misunderstanding and protects the company. ”
— ARON SCHOENFELD of Do It In Person LLC
Liability Release Forms
“Startups tend to have a variety of fun events that can involve risk. We play dodgeball in the office occasionally, so it’s important that we have employees sign a liability release form so we aren’t liable for an accident and can focus on the important thing: having fun. ”
— JOHN HALL of Influence & Co.
“A clear operating agreement, including a buy/sell clause, is essential. It should also include how partners’ compensation may change based on their role changes within the organization. These two items are must-haves in order to avoid miscommunication down the road.”
— FELIX LLUBERES of Position Logic
“First, you need corporate structure. Second, you need thorough insurance, which may be an investment, but it’s an investment that is worth making, from EPLI to cyber liability to directors and officers. Of course, if you are selling any kind of product, at the end of the day, you’ll always need a solid contract, too.”
— ADAM DEGRAIDE of Astonish
The Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, YEC recently launched StartupCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.