As an entrepreneur, you’ll be expected to fill in a number of different forms when you’re setting up your business. It can’t be overestimated how important a pen will be in the first few months of your business operations. Because you’ll be doing a lot of signing and writing.
But while you might have a good idea of what you’ll need to sign and fill in, it’s easier than you think to miss something. The likelihood of this happening increases for tech companies which will usually have even more documentation to deal with.
And according to Jones Whyte Lawyers in Glasgow While missing a form or forgetting your signature might not seem like a big deal it can have serious legal consequences.
It will also be sure to make running your business more difficult, so let’s take a look at five important legal documents entrepreneurs need to know about.
Without contracts in place your business opens itself up to a lot of potential legal problems, an employee contract is needed before anyone can legally work for you. As the entrepreneur behind the company, you’ll also need a contract for yourself as well. While many people know the importance of getting employee contracts set-up for anyone they hire, they often don’t realise the same rules apply to them.
But they do, an employee contract does more than layout what an employee’s job entails it defines all the important aspect of a person’s job, and this includes your job as well. The employee contract will vary from business to business and the position they’re working in. But in general, it covers and defines an employee’s duties, responsibilities, rights, and other legal requirements.
You’ll also need to prepare a written statement that outlines any employees working hours, holidays and their pay. Because tech companies will usually need to employ a lot of people in different roles it’s important you spend time outlining your employee’s contracts.
Technology companies are rarely made on their own, you might have a great idea for a revolutionary piece of tech but that alone won’t build a business. That’s why the vast majority of businesses are founded by a group of people and that’s why a founders’ agreement is so important.
The founders’ agreement details the ownership of the company and it also outlines the equity and investment. The agreement also governs what each founder is expected to do to fulfil their ownership rights and responsibilities.
You might be thinking this sounds really important how could I ever forget it? Well with the founders’ agreement it’s usually more of a case of not wanting to do it, many people form businesses with friends and family and as such deciding who is worth what can be very difficult and emotional for some people.
But it’s essential that you get the founders’ document worked out quickly because it’s one of the only real ways to ensure complete transparency with everyone. The founders’ agreement is also incredibly important from a legal perspective as well, so make sure you get this document set-up quickly.
The Health and Safety Policy
The technology industry might not seem like the most dangerous industry to work in but when you think about how vast it is, the possible dangers become a little more concerning don’t they? Plus, you have to remember people can just slip on a wet floor, the bottom line is a health and safety policy is important.
If your business has less than five employees, then you technically don’t have to have a written health and safety policy. However, you have to remember any business aims to grow, and in the tech industry, even small businesses will have big teams.
So, I’d recommend starting on your health and safety policy right away. From a legal standpoint, a health and safety policy is especially important, and it will show that you take your responsibilities as an employer seriously.
Memorandum and Articles of Association
The next two documents, we’ll be looking at are the memorandum and the articles of association. These two documents are closely intertwined which is why we’re looking at them both together.
The memorandum or memorandum of association has it’s known to some is essential if your business has multiple shareholders. This is common for tech start-ups, the document needs to be signed by all the businesses shareholders and dated. It’s a very simple document but one that is very important.
The articles of association cover a different area, but they must be set out with your businesses shareholders. So, what do the articles of association cover? They cover a lot, which is why it can take some time to set them up, which is why many people forget to.
The articles of association cover all the rules that you and your shareholders have agreed to when it comes to the day to day running of your business. This important legal document can vary wildly from business to business, but it will usually be relatively large in size.
A Shareholders Agreement
Despite the importance of shares (especially in the technology industry), this is one document that is easy to forget, after all, you might not offer shares right away. But a shareholder’s agreement is essential if you offer shares to people, so what does this document cover?
Many people overcomplicate shares, when you get right down to it they are much simpler than many people think. The shareholder’s agreement outlines everything your businesses shareholder’s need to know this includes the level of ownership, equity, and investment amongst other key details.
The agreement also includes other important areas like the processes of transferring shares, disputes, exit strategies and any restrictions you have set up. This documentation is very important from a legal standpoint because it governs all aspects of your share process.
Remembering Your Documentation
So, that’s a look at five important documents all tech industry entrepreneurs need to know about. Not all these documents need to be set up and done straight away but it’s a good idea to get them done and ready as soon as possible.