Few things are as exciting as getting a startup off of the ground. You have a great idea, and you are ready to run a business exactly how you think it should be run. Many people at this stage can forget to put work into creating contracts, documents that clearly outline responsibilities as they pertain to your business. They may feel redundant or like a buzzkill, but they are essential to maintaining your startup as it goes on. Consider that every time you work with someone else it is a transaction, and you want to have things clearly defined for those transactions.
Contracts do not only apply to one person, either. You should have them in place for every area of your new business. These are the three overarching areas where you need to have contracts in place:
1. Partners. If you started your business working alongside someone else, it is probably because both of you are excited about what you are doing. If you are taking the big step of starting a business with someone, it is important to spell out roles from the beginning. A contract will help you organize what responsibilities belong to which partner, helping your business functionality as well.
Making a contract for business partners from the beginning is important because it is probably when you will have the clearest vision of what your business will be. As things go on and you face struggles, your vision of what the contract should include may get muddled. Things could also get tense between you and your partner, so making a contract while you all are excited about the prospective business is the best bet. This is especially important for married couples starting a business together.
2. Everyone who works for you. Whether you are using employees, independent contractors, or both, you want to have clear contracts set up from the beginning. It is always the best practice to have things spelled out with people who are working for you. These contracts should cover both sides of the working relationship, what you are offering them in exchange for which specific services. This will be helpful and informative for your employees as well as beneficial for you.
3. Clients. You are doing business with your clients just as much as you are with your partners and employees. They are an essential part of your business, and deserve to have their services outlined as such. Any people you want to sell to or contract with are a part of this category, as well. These contracts will help illustrate that both of you are serious about the sale you are embarking on, and help protect you from any clients hoping to take advantage of you. When your business is young, you are most vulnerable to those hoping to take advantage of whatever you can do for them for free. Protect yourself and your business with contracts.
Contracts are an important part of getting any startup off of the ground. Without them, you are leaving your business open to doubt about your operations and legally unprotected from those who want to take advantage of you. If you have any questions about contracts or getting your startup running, contact Lockhart IP today. We are here to help!