9 Crucial Legal Documents Needed for your Business

Legal Documents

Every business requires calculated risk-taking abilities to succeed in today’s highly competitive market. That’s why gen-y entrepreneurs love to showcase their talent and risk-taking ability in front of the world. However, ending up in the legal battleground in the process due to missing legal documents would be a big blow to a business. 

Legal documents play an important role in safeguarding your business from misunderstandings and legal conflicts. Also, they help to ensure accountability and transparency whenever a dispute arises in the business space. Still, several business founders commit the common mistake of ignoring legal formalities during the early growth of their company. 

While it’s alluring to start constructing your vision for the business into a reality, you must cover all of your legal bases. Here’s a list of 9 essential legal papers you must possess before beginning full-scale operations.  

9 Necessary Legal Documents for a Business

Running a fully functional business involves a bulk-load of legal documents. The list includes Agreements of buying and selling, joint venture agreement, and licensing documents, to name a few. 

The following 9 documents will help to create a transparent and trusted relationship with your business associates. 

1. Memorandum of Understanding

The first thing you need to take care whenever you decide that you are going to start the business is taking care of a standard deed—clearing your and your partners’ interest in the company. A Memorandum of Understanding is what we can call it. 

You may or may not make the Memorandum of Understanding an official one but having that prepared is necessary. 

The Memorandum ensures there is a deal between all the parties while it also makes sure that everyone is in agreement. It clearly showcases the basic terms of understanding and clarifies what kind of contribution exactly you can anticipate from each other.

2. Registration of the Trademark

A registered name can help you strengthen your business. It creates a brand image over time. The trademark is the unique identity which helps your services or products stand out from the rest. The Controller General of Patents, Designs, and Trademarks, under the Ministry of Industry and Commerce register trademarks in India. 

It is governed by the Trademark Act, 1999. Products or services offered under a registered trademark aid businesses to build trust, goodwill, reliability through the customer base. 

Registering a trademark always gives you legal protection. Whenever you have any doubt of your trademark being used by someone else you can take legal actions through the help of this legal document.

If a brand creates a name, popularity, the trademark becomes a valuable asset. Hence, trademarks of successful businesses can be contracted commercially, sold and franchised.

3. Non-Disclosure Agreements

The first piece of document you need to produce while dealing with an investor or client is the non-disclosure agreement. This document ensures your company’s privacy. It not only protects your firm’s privacy from clients and investors but will also safeguard your intellectual property rights. 

Basically, a non-disclosure agreement allows you to create a trustworthy relationship between all the signatories. Through the help of this document, you can easily protect such information that you may require to share but needs to stay as confidential. 

The non-disclosure agreement is always essential to have if your business consists of an innovative idea to protect. The same document can be used to safeguard your ideas when you require to represent it to potential investors or while dealing with third parties like distributors or contractors.

Not having a non-disclosure agreement may cause serious harm to your business. Specifically, when you don’t have a non-disclosure agreement, the people or other companies with whom you share your ideas can expose it to others or can implement those on themselves. It can lead your business into a loss. Moreover, it can result in you losing your potential investment opportunities.

4. Employee Contracts Along with Offer Letters

Every business needs a team of employees to begin their operation. And, every new addition to your workforce is needed to be given a proper contract of employment. This contract should clearly mention the following.

  • Terms and conditions of employment
  • Reporting structures
  • Intellectual property ownership of the work
  • Job role and expectations
  • Share vesting
  • Company policies

5. Shareholders Agreement

When your business is prepared to attract private investments from individuals and corporate houses, an agreement of shareholders’ is needed to put in place. When it comes to determining shareholders’ rights, liability, and ability to exercise rights, shareholders’ agreement is the most vital legal document. 

A well-drafted Shareholders’ Agreement is advisable to ensure the smooth running of your business. The agreement must outline the specific relationship with the shareholders. It also establishes the rights and obligations of the shareholders. 

Moreover, the agreement explicitly defines the proportion of the share of each party involved, terms about profit-sharing alongside, the procedure of decision making inside the company. 

The deal has the potential to safeguard the interests of shareholders in different circumstances. Not only that, but also the agreement helps you to protect your investment in the business simply by including clauses to force the shareholders to sell their stakes to you if an unfavorable situation arises.

6. The Service Agreement of Directors

The Directors’ service agreement is similar to an employment agreement; it states the basic obligations of the directors to the company. Eventually, directors are the one answerable when it comes to maintaining a healthy business. Therefore, the power of the directors needs plain characterisation so that no conflicts and difficulties arise later.

This legal document should have clarification on the responsibility of the directors for the organization, working hours, the pay scale, and arrangements once the service ends.

7. Business Plan

A business plan may not be part of your legal documents, but it’s crucial to have a business plan. An organized business plan can help you to manage your business effectively in the long run. It’s a common fact that with the time you need investment to run your business. 

Only a proper business plan can get you funding from the market. A properly organised business plan should answer the following questions:

  • What is the specific problem your service or product can solve?
  • How do you plan to solve the problem?
  • Why do you think you have the best-suited plan to solve the problem?

A business plan is nothing but a structured form that represents all the data a potential investor needs to know about your business. It should clarify the following points:

  • Who manages your business?
  • The specific service or product you offer
  • What is your marketing and sales strategy?
  • Which one is your target market, and what is your plan to reach them?
  • What are the market risks that your business needs to operate effectively?
  • How have you planned to offer the product or service to the customer?

In a nutshell, a business plan is a clear statement that will offer an idea to your potential investor: why do you require the money, how are you going to spend it, and how will you earn it back?

8. Terms and Conditions Related to The Supply of Goods or Services

Deciding the terms of doing business with your clients at the time of offering products or services is essential. In the complete lifecycle of your business, you must have the Terms and Conditions always ready at the time when you act as a provider or a purchaser.

Being one of the most crucial legal documents it should include detail regarding contact formation. The Terms and Conditions should be able to deal with the exact payment process, delivery of the goods or services, policy related to cancellations, and returns. 

In the Terms and Conditions document you need to include such provisions to limit your liability as an owner and if in case there are any events of insolvency or dispute the terms and conditions should be able to determine the law applicable to solve it.

Moreover, the terms and conditions are the main point of reference to resolve any dispute. Therefore, it has an impact on your business. Usually, a standard terms and conditions applies however, a properly structured industry specific document always helps. You can seek legal advice to set an industry specific, tailor-made legal document for your business.

9. Terms of Use Agreement for Website

Setting up a website is always advisable for every growing business. And, necessary to a website is terms of use agreement. So, constituting a website user agreement is a must to eliminate all disputes regarding website use. 

You may be wondering why a Website User agreement or Terms and Conditions required at all. Because all we know is that there are hardly any people who actually read the terms and conditions of a website. But let’s make things clear, having website terms and conditions is as important as the other legal documents we mentioned here. 

The Terms and Conditions of any website ensures an online agreement between the client and the business. The page outlines the legal rights and obligations of each party associated. Alongside this, the Terms and Condition page always offers a fair idea to the users on how to use the website.

Without having the terms and conditions set for your website, your business gets exposed with the liabilities of the contents of the website. Any fault that arises on the customers’ side because of following the website’s data can drag you into a legal battle.

The Terms and Conditions of your website also offer you the right to safeguard your own intellectual property along with your end users’ data.


These legal documents aren’t a sure shot set of instructions for a business’s success. However, without them, the chances of failure increase significantly for any new business. 

Read more: Why should you register a private limited company?

DISCLAIMER: The views expressed are strictly of the author and VJM & Associates LLP. The contents of this article are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the author nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon.

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