Starting your own small business is an exciting yet daunting experience, and — as any small business owner knows — there’s never enough time to get everything done. If you’re spending your time juggling employees, clients, and family, it’s understandable that sometimes the legal stuff ends up at the bottom of your to-do list.
Nonetheless, you know that it’s good for you and your business to incorporate. You’ve taken that first big step and formed a C-Corp, S-Corp, or an LLC. That’s great! But many people just stop there. They shouldn’t. After all, if you neglect other key documents you should create soon after incorporating your business, you could face expensive legal issues as your company grows.
Here are three such documents that should be created for recently incorporated companies. Being diligent about these can save you tons of hassle (and money) in the long run.
What are Bylaws?
Put simply, Bylaws are the operational blueprint for your company. If your business is a C-Corp or S-Corp, you’ll need them and if your business is an LLC, you’ll need an LLC Operating Agreement, which is similar. They state the internal purpose or mission of the business. The Bylaws may also contain information concerning the rights of shareholders, directors, and officers, identifying information, and corporate name protection.
Why do You Need Bylaws?
Banks and other businesses are much more likely to lend or partner with you if you can provide them copies of your Bylaws. Bylaws are also necessary to address problems that may arise within the company (like a director voting on an issue he has direct financial interest in). They act as a kind of legal backbone, in other words. Plus, your corporation does not technically exist until your Bylaws are adopted, and without them, you may not have the shield of limited liability protection if your company is sued.
Rocket Lawyer makes it easy to start writing your Corporate Bylaws today.
What is a Buy-Sell Agreement?
The Buy-Sell Agreement is akin to a prenuptial agreement, except for your business. Basically, it ensures continuity of ownership if you or a co-owner dies or has to leave the business voluntarily or involuntarily.
Why do You Need a Buy-Sell Agreement?
Getting a Buy-Sell Agreement is important to a business’s long-term plans. Business can be interrupted or even halted when a co-owner leaves, either due to death or another reason, and the remaining owners are left to figure out who will fill the void. These situations can lead to lengthy internal legal disputes. Examples include an owner leaving his or her share of a company to someone the other owners consider to be a disreputable family member, or even a divorce can cause havoc when an ex-spouse suddenly becomes a company owner against the wishes of the other owners.
Rocket Lawyer provides a free, easy-to-complete Buy-Sell Agreement. Protect your business tomorrow by getting started today.
What are Corporate Minutes?
Corporate Minutes are your business’s records of decision making at board or shareholder meetings. Corporate Minutes are private records that provide a concise, clear method of organizing information from prior meetings.
Why do You Need Corporate Minutes?
Corporate Minutes are a government requirement. Keeping accurate minutes can save your company a lot of professional fees later when trying to piece together your business history. They contain crucial information — such as the appointment of directors — as well as stock records and are admissible in court as proof your company acted in the best interests of its shareholders.
Rocket Lawyer makes it easy to record your Corporate Minutes for all your important meetings.
In addition to the above documents, you may also need to keep other records when starting your business, including those pertaining to business insurance and employee agreements. You can visit our Corporate Compliance Center to get corporate compliance documents and maintain your legal protection or check out our Business Help section for more information to keep your company safe and legally secure.
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