Startups encounter numerous legal aspects that require attention. They heavily rely on legal documentation to establish terms in various areas such as sales contracts, the hiring process, partnership agreements, and more. Inadequate legal documents can lead to slower or failed deals, as well as lower valuations for the company. Conversely, effectively managing your legal documents will contribute to your company’s success when undergoing legal due diligence for financing (debt or equity), acquisitions, or an initial public offering (IPO). It is crucial to note that employing “right-sized” legal language can minimize conflicts and act as a catalyst for growth, benefiting customers, partnerships, employees, and contractors. By using appropriate legal documents, a startup can foster growth instead of impeding it.
The problem is that it can be expensive and time-consuming to create the legal documents you need to run an early-stage, high-growth business. It can cost $10k-$300k/month to hire a law firm to create and maintain the documents a startup needs to operate. And startups don’t have extra time to spend in the weeds of legal research, trying to create compliant legal documents themselves.
What are the legal documents that startups need and how can you draft them easily and correctly? Startups need documents to support three basic categories: managing employees, making money, and staying out of trouble.
Documents that help with employees
With the recent expansion of remote work, employees want to live all over the nation. This can be complicated for employers because each state has different employment laws. You can’t use the same employment paperwork in California, for example, that you do in Texas. To effectively manage a diverse workforce, employers must adapt their hiring, management, and separation processes to comply with the laws of every state where they operate.
Some crucial employment documents include:
- Offer letters
- Employment agreements
- Employee handbook
- Separation agreements
Because the legal clauses required in each of these documents vary wildly from state to state, it’s essential for employers to follow employment laws in every jurisdiction where they have employees or are looking to hire—or to rely on legal experts to follow new and current legislation and craft compliant and customized legal documents accordingly.
Documents that help you make money
Having the right legal documents is essential for businesses to effectively navigate each stage of the revenue process and maximize their earning potential. These documents play a crucial role in safeguarding the business’s interests, establishing clear rights and responsibilities, and mitigating potential risks.
- During the marketing phase, businesses often need to showcase their product or brand through various media channels. In such cases, obtaining media releases is essential to secure permission from customers or individuals featured in promotional materials. Similarly, trademark licensing agreements are necessary when businesses want to protect their logos and grant permission for their use in marketing materials or collaborations. By having these legal documents in place, businesses can confidently market their products without infringing upon others’ rights or facing legal consequences.
- To sell your product, you may need master service or subscription agreements or order forms. These documents are used to outline the terms and conditions of service, ensuring that both the business and its customers are aware of their respective obligations and entitlements. Order forms provide a standardized framework for capturing essential details of the transaction, such as product specifications, pricing, and payment terms. These documents help establish clarity, minimize disputes, and enable businesses to streamline their sales processes effectively.
- To partner you need NDAs, reseller and referral agreements. Non-disclosure agreements (NDAs) protect confidential information when businesses share sensitive data with partners, ensuring that proprietary information remains secure. Reseller and referral agreements establish clear terms and conditions for partnerships, outlining the rights and obligations of each party involved. These legal documents help protect the business’s interests, maintain confidentiality, and ensure fair and mutually beneficial partnerships.
Having the right legal documents at each stage of the revenue process is vital for businesses to protect their assets, maintain legal compliance, and foster trust and transparency with customers, partners, and stakeholders. By utilizing these documents effectively, businesses can confidently navigate the revenue process and optimize their ability to generate revenue and sustain long-term success.
Documents that keep you out of trouble
Startups need documents to keep them in order and off the radar of regulators.
- Equity plan documents help to issue options to employees and advisors in a transparent and compliant manner. By following the appropriate procedures outlined in equity plan documents, companies can effectively distribute ownership stakes to individuals who contribute to the company’s growth and success.
- Governance documents are essential for maintaining a well-organized and compliant company. These documents outline the structure, roles, and responsibilities of the company’s leadership, board of directors, and various committees.
- Website documents also play a crucial role in keeping the company off the regulators’ radar. The language used on a company’s website can greatly impact how regulators and customers perceive the business. Website documents, such as terms of service, privacy policies, and disclaimers, ensure that the company presents itself in a compliant and transparent manner to its online visitors.
Creating and maintaining these types of documents can foster trust and loyalty among employees and advisors but also mitigates the risk of regulatory scrutiny.
Business Docs & Employment Docs with SixFifty
“Lawyers don’t want to reinvent the wheel,” said Derek Parry, GC at SixFifty. “So it’s really silly to me that every time someone starts a business, lawyers have to spend endless hours and resources creating a legal document library to pull from.”
Parry says in-house counsels often spend far too much time on busy work that keeps them from doing what really matters. “They might spend two to three hours just setting up a basic framework—all before focusing on the principle terms that are the real meat and potatoes of the legal document,” Parry said.
SixFifty is proud to offer the most extensive library of top-tier, automated legal documents on the market. We empower Legal, HR, and Operations teams to confidently create the necessary documents in-house with a guided question-and-answer flow and detailed explanations. In mere minutes, you can draft a fully customized, state-specific employment agreement, offer letter, or even a website privacy notice, allowing you to lay the foundation for compliant growth.
SixFifty has the largest library of automated world-class legal documents for startups.
“We were able to successfully create all of our employment agreements last night; thanks for your help on the quick turnaround. I also wanted to give you kudos on your platform. This is one of the slickest software platforms I have ever used. I was really impressed with the user experience and how easy it was to navigate with limited orientation. Great work!”
-Sara Taylor, CFO | Engage Technologies Group, a series A startup
“This is incredibly useful: I wanted to create legal forms for offer letters and employment agreements, and SixFifty walked me through a ‘TurboTax-like’ interface that was completely transparent, and in less than 10 minutes of work I had generated 2 perfect legal forms. I would STRONGLY encourage any start-ups that need standard legal agreements to give this a try. Oh also—their team is great. Super helpful!”
-Eric Rosenblim, Foothill Ventures
SixFifty for startups
SixFifty is excited to offer an exclusive package for fast-growing startups—complete with the documents you need to hire and manage employees (Employment Docs) and the essential documents to manage business operations (Business Docs).
Ask about our startup bundle and received five free customized documents:
- Independent contractor agreement
- General privacy notice
- Offer letter
Every budget decision matters, which is why we price our startup bundle up to 80% less than traditional outside counsel. Our annual subscription offers unlimited document creation, so you’ll never have to worry about budgeting for new legal documents.
Ready to take a closer look? Book a free, personalized demo today!