Starting or Restructuring a Business? Legal Documents to Settle Early

1. Match the entity to the business

A proprietorship, partnership, LLP and company do not create the same governance, liability, compliance or ownership structure. The choice should be made with the expected owners, funding, risk and operating model in mind.

If a business has already started informally, the transition to a formal entity should address assets, contracts, bank arrangements, licences and intellectual property rather than only incorporation paperwork.

2. Record founder and ownership arrangements

Where more than one person is building the business, document contributions, ownership, decision rights, responsibilities, transfer restrictions and exit expectations. Verbal understandings become difficult to prove once commercial interests diverge.

For companies and LLPs, the constitutional and internal arrangements should also be consistent with the filings and statutory framework that actually govern the entity.

3. Decide who can bind the business

Banks, vendors, landlords, platforms and counterparties often require proof of authority. Board resolutions, partner approvals, powers or internal delegations should match the transaction being entered into.

A contract signed by the wrong person can create avoidable questions about authority, ratification and internal responsibility.

4. Put IP and confidentiality ownership in writing

Logos, software, designs, content, databases and commercial know how may be created by founders, employees, agencies or freelancers. Ownership should not be assumed merely because the business paid for the work.

Employment, consultancy and vendor documents should deal with confidentiality, permitted use and assignment or licensing of relevant rights where legally appropriate.

5. Create a small set of repeatable commercial documents

Most businesses benefit from having reviewed templates for their recurring relationships rather than negotiating every transaction from scratch. The form should reflect the business model, not a generic document downloaded from the internet.

Typical areas include payment, scope, delivery, confidentiality, liability, termination, dispute resolution and data or IP obligations.

Useful early stage document set

The exact list depends on the entity and business model.

• Constitutional or partnership/LLP documents and key ownership records.
• Founder or shareholder arrangements where appropriate.
• Board/partner resolutions and authority records.
• Employment, consultancy and confidentiality documentation.
• Core customer, vendor and service agreements.
• IP assignment/licensing documents for important brand or technology assets.