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What Legal Documents Are Essential to My Business?

LLC Articles of Organization/Operating Agreement

What is it?

Articles of Organization, and Operating Agreement are both documents that relate to LLC formation. Articles of Organization are filed with the Oklahoma Secretary of State and contain some fundamental information about the LLC:

  • The LLC's name.
  • Street address of the principal place of business for the LLC.
  • Name and address of a registered agent for service of legal papers.
  • The purpose of the LLC - usually anything lawful
  • The duration of the LLC – usually perpetual.
  • In most cases, no other information is necessary.

Your Operating Agreement is one of the most important documents for your business. It is an internal document and not filed with the state. Essentially, it is an agreement between the LLC members on the handling of certain basic operations, taxes, handling of profits and losses, and resolving disputes. By adopting and keeping an Operating Agreement up to date, members can refer back to a clear set of rules that they have already agreed to. It can help reduce arguments and disagreements down the line and save money and time spent dealing with misunderstandings.

Operating Agreements give LLCs the ability to govern their business the way they want rather than by default state rules. They govern the management and operation of the LLC and can describe the economic and business arrangement of LLC members.

Why do I need it?

Business owners need to do this to shield themselves from personal liability for claims against the company. It also establishes credibility and legitimacy for people with whom you do business. Banks, lenders, and others you may do business with require one before they can do business with you.

Employment Agreement

At the very least, have a letter or term sheet for the employee with a job title sentence, job description sentence, compensation rate sentence, at will employment sentence, and place for employee to sign. Some jobs may call for more thorough legal contracts.

What is it?

An Employment Agreement is a written agreement that specifies the conditions of the relationship between an employee and an employer, including compensation and expectations. Also referred to as an Employment Contract, this form is sometimes executed for a specified period of time, such as one year, or it may say employment is “at will,” meaning the parties are free to end the relationship at any time.

Why do I need it?

To avoid confusion, misunderstanding, and claims about what the job is and what the employee is supposed to be paid.
 

Employee Handbook (even small employers need it!)

What is it?

An Employee Handbook is a document that communicates your company's mission, policies and expectations. Employers give this to employees to clarify their rights and responsibilities during their employment with the company.

Why do I need it?

To set expectations and standards of conduct in the workplace; guide management and ownership so they know how to deal with employee problems; avoids claims and lawsuits; courts say effective policies and procedures can be a defense to some lawsuit if they do happen. 

Confidentiality/non-disclosure/non-solicit-agreement for employees

What is it?

A written legal contract between an employer and employee. The agreement lays out terms and conditions about keeping business matters confidential, limiting the disclosure of certain sensitive business information, and making sure employees do not unfairly take away the employer’s customers and employees.

The agreement can apply during and after an employee’s employment.

Why do I need it?

Protects company’s investment in its customer base, unique business methods/advantages, and intellectual property

Independent contractor agreement (for major service providers or subcontractors who legitimately are not employees)

What is it?

An Independent Contractor Agreement is a written contract between two parties for a specific service or project. One person or company is hiring another to help on a defined task, or to provide services the company needs. Unlike an employment agreement, this document should clearly spell out why the contractor is not an employee for legal and tax purposes.

Why do I need it?

Defines the relationship between the parties and avoids lawsuit problems.

Vendor/Supplier Agreement (for major vendors)

What is it?

A vendor agreement is a legal agreement that clearly states the provisions and conditions of the work to be performed by a contractor. The key points to include in a vendor agreement are date, time and location where the services must be provided.

Why do I need it?

Defines the relationship between the parties and avoids lawsuit problems.

While the above documents are not an exhaustive list of legal documents needed, they are a start for consideration. Contact a qualified business attorney for help in drafting the documents and tailoring them to your specific needs.

Remember the old adage, “The best legal fight I was ever in, was the one I avoided.” Tailored to your specific needs by a qualified attorney, the correct documentation will help you run your business and avoid legal battles.

Professional Insights from MNTC Employees, students, and community members
Portrait Henry Dumas

Henry Dumas, Professional Certified Coach
I am passionate about helping business owners to stabilize and grow their businesses through one on one executive coaching. With over 30 years of private sector experience helping companies succeed in roles such as Sales Manager, Small Business Owner, Agency Manager, Chief Financial Officer, Public Accounting-Audit and Controller as well as certifications earned as a Professional Certified Coach (PCC), Covey Facilitator and GrowthWheel Certified Business Advisor, I am well positioned to engage, enlighten and empower business Owners.

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