Five Types of Contracts Every Startup Needs

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A contract is a written agreement between two or parties that legally binds them to defined terms and conditions. The professional world functions on written contracts to avoid frauds and protect their businesses. New companies usually ignore these things and end up paying a huge price.

It’s no longer an expensive or time-consuming task to draft a contract. There are certain platforms that create contracts for you digitally so that you don’t have to worry about the legal aspects of running your business such as Upwork for instance. When I first started freelancing as an SEO analyst on Upwork, I would simply digitally accept an offer shared by a client, and rest assured that the standard contract that the platform offered was fair enough to protect both parties.

If you need to create contracts from scratch though for your startup or small business, you can easily find contract templates and get them signed online. Below I have shared five contracts that every startup needs.

Contracts for New Clients

You will always be attracting and working with new clients for the growth of your business. You won’t always find nice and professional people who would value your services and pay what is your right. There are many unprofessional businessmen out there who don’t give any value to ethics. Prepare a contract for all your new clients before starting any work with them. You should write all terms and conditions, durations, and payment schedules in this agreement and have them sign it.

Contracts for New Projects

Even with existing clients you should use a contract before starting any new project. The document should contain details of the project and how the parties will pursue it. You can make just one agreement that is automatically implemented on all future projects, but that is likely to have many loopholes in it. This practice provides more flexibility on terms and conditions of each new project.

Employment Contracts

Many startups hire employees without signing any contracts with them. It is important for the protection of both employees and the company. You won’t be able to take any legal actions against unethical actions of an employee if you don’t have any written proof that he is your employee. You should write the terms of employment, policies, expectations, and reporting structure in this contract.

Founder’s Agreement

Founder’s agreement is absolutely important if there are more than one stakeholders in the company. You should have current and future agreements in a written format even if you are brothers. This saves you from future disputes and ensures that every partner does his job properly and is rewarded for his efforts and investment.

Non-Disclosure Agreements

NDAs should be separately signed by all your partners, employees, and clients. This agreement focuses on the privacy and protection of the company information and assets. You will discuss many things with inside and outside parties in which you might present your ideas and intellectual property – non-disclosure agreement safeguards them.

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