By Maria Loni

Starting a new business can be an exciting and challenging endeavor. There are 3 key documents that you need to have in place to ensure the smooth operation of your startup and to avoid the legal risks that come down the track with poor planning.

1. Company Registration Documents

To legally operate your start-up, you must register your company with ASIC to obtain an Australian Business Number (the 'ABN') and Australian Company Number (the 'ACN') and registering your business trading name or company name.

These documents are essential for tax purposes and to establish your business as a legal entity. As part of your company formation process, you may want to consider adopting a company constitution can be lodged when applying to register the company. A company constitution contains governing provisions on the company, its processes and internal management and includes rules on the roles, rights and obligations of these members

2. Founders Agreement or Shareholders Agreement

Depending on what stage your start-up is at, having a Founders Agreement, Shareholders Agreement or both is crucial for navigating the roles, responsibilities and long-term road map of the business.

A great Founders Agreement should clearly set out the obligations, rights and liabilities between the co founders to mitigate the risks that often come later down the track when the start-up grows. In addition, the Founders Agreement should contain provisions on the ownership structure, decision-making and operational processes, intellectual property of the company, confidentiality and non-disclosure obligations and dispute resolution processes in the event of a conflict.

Where your start-up has obtained external investment or there are multiple parties involved who each own a percentage of the company, a Shareholders Agreement is an essential document to outline the roles and responsibilities of each shareholder. The Shareholder's Agreement should contain provisions on share sales, the transfer of shares, vesting and voting rights.

3. Employment Contracts

As your start-up grows, you may need to hire employees to support your business operations. It is crucial to have employment contracts in place to protect both your business and your employees.

These contracts outline the terms and conditions of employment, including job responsibilities, compensation, working hours, and any other relevant policies. Having employment contracts ensures that both parties are aware of their rights and obligations, reducing the risk of disputes in the future.

A good employment contract should also contain clauses regarding protection of intellectual property, restraint of trade and confidentiality.

Conclusion:

Starting a business in Sydney requires careful planning and compliance with legal requirements. By having these three starter documents in place, you can set your start-up on the path to success.

REMEMBER, investing time and effort in these essential documents will pay off in the long run and set a strong foundation for your start-up in Sydney.

Here at Purpose Lawyers, we offer a Complimentary 15-minute advice session.

Please contact us on 1300 806 106 or email us at info@purposelawyers.com.au to arrange your complimentary advice session today!