The idea of starting a business is a pleasing one that many people nurse. However, there are many important hurdles one needs to cross in the journey to becoming an entrepreneur. One of them is getting all the required documents for the smooth sale of your business. This is something you shouldn’t joke with, as failure to acquire all essential documents could come with severe consequences.
However, only a few businesses manage to get the essential documents in place before startup. Yet, the presence of all records is vital to your success as it helps you stay on the right side of the law. Some of these documents are vital to protecting the business owner’s interest through the lifetime of such a company.
Here are five essential business documents essential for intending entrepreneurs before going into business.
1. Business Plan
A business plan is one of the essential documents that helps a business get funding. In creating your business plan, make sure it reflects the problem your company wants to address, the plan to solve it, and what makes you best suited for the solution.
With a business plan, you can cover every piece of information a potential investor might be interested in, like:
- The management structure of the business
- Intended product and services
- The sales and marketing strategies
- What you need for the effective operation
- Your target and method to reach them
- The risk in your business
In summary, a business plan addresses your reason for funding through back link outreach service, the plan for the money, and how investors can recoup their investment, making it one of the company formation documents required in UK.
2. Certificate of Incorporation
This is a legal document issued by the Companies House, which reveals that the business (LLP or Limited Company) has been registered.
For businesses registering as a company, they will get a certificate of incorporation, while a corporation registered as a business gets a business name certificate.
This document shows that the business has satisfied all requirements of the law for its setup. As a result, the business is legally distinct from the business owner/shareholders. With this, the law has the same rights as someone recognized under the law.
Such a document will come in handy when selling shares, renting or buying properties on behalf of the company, opening a business bank account, selling the company, etc.
3. Employment Agreement
The presence of someone working for your business necessitates an employment contract. If such is absent, there is a high tendency of miscommunication between the parties.
With a written agreement, both parties know their obligations, which removes the need for future conflicts. Essential information like the following is present.
- Compensations like wages
- Responsibilities
- Working hours
- Confidentiality
- Position
- Non-compete clauses, etc.
There are many benefits of having an employment agreement for both parties. A few of these are:
- Both parties know what to expect as the terms of the employment are clear
- It allows the parties to negotiate the employment terms
- The presence of a confidentiality clause helps protect a trade secret, copyrighted materials, etc.
- It brings about a sense of protection and stability for the parties.
4. Operating Agreement
Businesses formed as limited liability entities require an operating agreement. This legal document states the terms of the LLC based on the exact needs of the owners.
With the operating agreement, the duties, obligations, and expectations of each business owner will be clear. The document resembles the Articles of Association even though they are not the same. The operating agreement tilts towards the legal requirement while the operating agreement takes care of the owner’s interest.
The document is like a blueprint that guides the operation of the business like finances, administrative decisions, and many others. It also protects the company’s status and sheds light on verbal agreement between the owners.
Many businesses are set up as limited liability companies; however, they prefer to use an article of association in place of an operating agreement.
5. Non-Disclosure Agreement
Parts of the concerns of every business is guarding its confidential information (secrets) against getting into the wrong hands. Such secrets need to be guarded jealously as misuse can imply negative consequences on the business.
Trade secrets, financial records, client information are examples of such confidential information that needs protection. This makes it essential to have an agreement between parties with access to such information and the business.
It is a legal document, which establishes confidential information between the concerned parties. Everyone privileged to such information cannot disclose such information to third parties without the business owner’s approval.
As a result, any staff that will access confidential information needs to sign the non-disclosure agreement. With this, such a person will understand the restrictions and expectations of access to such information.
Conclusion
No matter the size of your company – general partnership, a limited liability company, or a corporation, you have a terrific advantage with the presence of all essential business documents.
You should not count such documents as unnecessary formalities as they are essential in setting the proper foundation for the business. With such documents also comes peace of mind as you conduct your business.
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