As the year comes to an end and we take stocks of our successes and failures, one thing stands out; we made some mistakes-mistakes we don’t want to repeat next year.
We lost some opportunities to make big money but were not prepared for them when they came knocking.
To be ready for the bounties of 2023, you as a businessman, must have the following legal documents;
1.Incorporation Certificate:
Whatever be the form of business you want to engage in 2023, the first fundamental document, is Certificate of Incorporation.
This is gotten after you had applied to Corporate Affairs Commission (CAC). This certificate confers legitimacy on your business, gives it a corporate identity and gives you confidence when you are dealing with a prospective client.
2.LLC Operating Agreement:
Setting up your business as a limited liability company (LIC) offers some advantages that are not available to sole proprietors or partnerships. These advantages relate mostly to limiting personal liability as much as possible.
However, there are also significant cash flow and tax advantages, which make operating your business as an LLC even more at-tractive. You can form an LLC easily enough. Just go to your local Secretary of State’s website and file your articles of organization, which are usually pretty straightforward and easy to do.
If your LLC has two or more owners, you will want to create a limited liability company operating agreement to define how your LLC will operate and how it should be taxed.
3. Business Plan:
Almost every business needs a little funding to get started. A business plan can help you attract the investment you need and is usually a requirement when you seek finance. When you are creating your business plan, you should be sure of three things:
The problem you want to solve;
How you plan to solve it;
Why your business is best suited to solve this problem.
A business plan, is a structured way to present this information and should cover everything a potential investor would want to know, chiefly: who manages your business, your products or services, your marketing and sales strategy, what you need to operate effectively, your target market and how you plan to reach it, what risks there are in the market in which you ope-rate, and how your products or services will be delivered to your customers.
In short, your business plan is a clear statement of why you need the money, how it will be spent and how it will be earned back. This way, your potential investors can swiftly make an informed decision whether or not to invest in your business. Use our business plan template to create your business plan now.
4.Partnership Agreement:
Starting a business is often easier when you do it with a partner with whom you can share responsibilities and split the startup costs.
On the other hand, there are many issues that can arise from a business partnership, whether it is between two individuals or more.
Therefore, everyone involved needs to understand the terms of your partnership and agree to them ahead of time. Otherwise, legal disputes may arise, which are always a drain on business resources and from which most business startups will not recover.
By addressing the following issues, a partnership agreement will allow you to clearly define the terms of your partnership and avoid costly legal problems in the future:
the names of the partners; the duration of the partnership;
each partner’s contributions to the business in terms of money, land, or business equipment;
the division of labor and authority;
how new partners may be added, if necessary What happens to the business when a partner dies or otherwise leaves the partnership.
Make sure you register your partnership at CAC.
5.Buy/Sell Agreement:
In today’s competing business environment, small businesses and startups cannot afford to have any problems. One thing that often causes a tremendous amount of problems for a business is the lack of a buy/sell agreement.
A buy/sell agreement is an agreement between a minimum of two parties, such as a business and its owners (and their heirs and is useful in the following situations:
Business relationships change all the time. You or your partner may choose to leave the business, or a new partner can be brought on board. A buy/sell agreement sets the arrangements up in advance and makes the transition easier on everyone involved.
At some point, you or your partner may want to retire, or one of you may pass away suddenly. If you have an heir, you may want to pass your business on to them. A buy/sell agreement can help you plan ahead and determine:
what will happen to the business when this hap-pens; and whether or not the heir will be able to become a new partner or be required to sell their part of the business.
It will also determine ahead of time the price for which a share of the business can be sold, thereby reducing stress and headaches for all parties. Situations in your personal life can affect your business as well. You or a partner can get divorced or de-care personal bankruptcy. A buy/sell agreement can predetermine the business arrangements should one of these situations arise and can protect everyone from the legal complications involved.
If you or your partner becomes ill or gets injured, you may no longer be able to work or contribute to the business. Creating a mechanism by which the remaining partners can buy you out quickly can be beneficial.
Often, this is facilitated by taking out an insurance policy on each partner in your business. This insurance will cover the financial cost of buying back that partner’s share of the business if and when that person becomes critically ill or passes away.
6. Employment Agreement:
Anytime you have an employee or someone who is doing work for your business, you have an employment contract. It may be oral or implied, but there is a contract.
However, in the absence of a written agreement, the terms of the employment are subject to miscommunication and misunderstanding.
A written employment agreement can clarify what is expected of both employee and employer and help to avoid future conflict by addressing important aspects of the employment arrangement such as;
working hours, position, confidentiality,
non-solicit and non-compete clauses, and termination and notice period.
