One of the key elements in day-to-day business operations is the implementation of legal documents. It is essential to ensure proper legal, administrative, and labor requirements are always in place. The size of the business, how long it has been in operation, and the industry it is classified under doesn’t matter.
The first thing you should know is that smart businessmen and large investors use legal documents to protect their commercial interests and minimize financial risks. That’s the reason why legal documents should be drafted by experts who can foresee future issues that may impact you or your business.
Some of the most common documents are:
- Confidentiality and non-disclosure agreement: A company’s confidential information can be anything from a business plan, a database, financial records, customer lists to trade secrets. That is why it is common to sign such agreements with contractors, employees, co-investors, and even business partners. A good confidentiality agreement prevents the other side from stealing or disclosing sensitive information. It establishes the conditions of what should be confidential, for how long, any limitations regarding the use of the information, and the right to obtain monetary compensation if any information is disclosed.
- Employment Agreements: Even if you have one employee, you must ensure an employment contract coincides with current labor laws and stipulates employee wages, working hours, rest hours, sick and vacation leave, safety and welfare, and actions upon the termination of employment.
- Lease Agreements: If you rent a space for your business, you must sign a lease agreement that clearly outlines the duration of the lease, as well as the obligations of the lessor and the lessee.
- Agreements with subcontractors or external agencies: For many companies, it is easier to hire a subcontractor or external agency for a specific project or service retainer for a specific period. The most common ones are usually cleaning or security. However, no matter what type of provider a company needs, the agreement is critical. It must clearly state the terms and conditions, service guarantees, as well as rates and extra fees, among other things.
There are many other legal documents that your business must sign and keep up to date. There are many templates out there with basic verbiage for each of these types of contracts, but in my experience, using them could end up being a big mistake.
Smart business owners must protect their interests against potential financial risks and legal liabilities, which is why contracts should be tailored to your needs.
Speaking to someone who specializes in business law and is the first step to understanding your options and making the best decisions regarding your business’s legal processes.