Many small businesses start without knowing the legal process for starting a business. There are certain legal documents which are a must for any startup business. Avoiding the process can cost you in the long run, possibly legally or monetarily. For example, you start working for yourself and someone tells you that you can file as a sole proprietor with your social security number. You think you have it all covered. Suddenly, you get sued for a lot of money for damages. You will be held solely liable, and the courts can place a lien against your personal property. This is definitely the scenario you want to avoid.

As with all small business ideas, creating a good plan and completing all the legal tasks is the perfect way to start. Legal documents are part of the process. Many small business startups consult with a lawyer, but it is possible to get your legal documentation filed inexpensively. Below are listed the top six legal document must haves that every startup should have. Articles of incorporation are available in the state where you plan on starting your business.

Articles of Incorporation

Every state requires that an article of incorporation be filed when incorporating. It registers your company's name and states your company's purpose for operating within the state as a domestic business. Your business will up and running in no time after you receive your approval.

Corporate Bylaws

Corporate Bylaws define how your company will operate by establishing rules and procedures. They define personnel structure, duties, and responsibilities. There are many free templates available online and you can even approach your small business government organization for the document.

LLC Operating Agreement

If you are establishing an LLC, then you will want to file an LLC operating agreement. You will not need this form if you are incorporating and vice versa. Set rules for your LLC, define important relationships, ownership interests, membership interests, while helping them not take on personal liability of the company. Define division of profits and losses. Slate out managerial responsibilities. Outline voting rights and procedures. This important document not only helps define your LLC, but also keeps everyone involved protected legally. You can find this document, which is state specific, at your local small business government organization, a lawyer, or an agent specifically designed to process LLCs.

Non-Disclosure Agreement

A non-disclosure agreement is a must if you are hiring employees. This document prevents your employees from discussing sensitive company information outside of the workplace. Business to business companies find this document useful because their business is their business. There is no need for sensitive company information to become local bar chatter.

Employee Contracts

Employee contracts are generally handled by the Human Resources department. These contracts are the agreement between employer and employee and define expected conditions, attire, and behavior while at the workplace. These contracts help companies protect themselves legally from various things which can happen because of an employee. Each agreement can vary, and you can create your own agreement with the help of a lawyer. These agreements are necessary if you think your new business will be hiring employees.

Shareholder Agreement

Do you think you will go public with your company? If so, then you will need a Shareholder Agreement. This is an agreement between the company and the shareholders. It clearly defines the shareholders ownership rights and obligations.

Now that you have the top 6 legal documents that you could need to start your new business and keep you and your company legally protected, it is time to get working on your business plan.