Although starting a business from scratch may be seen as a less document intensive process, there are still a large number of considerations involved, in terms of documentation checklists.
Firstly, you will be required to create a business entity to run the actual operation. If you are a sole trader, there are no official documents that you will need to create. However, all other types of entities will require a degree of preparation. If you are going to operate as a partnership, it is highly advisable to deal with the key issues of the partnership, although strictly speaking, you are not legally required to have a partnership agreement in place.
For example, the agreement should cover issues such as the amount of equity each partner is going to bring to the business, the amount of time and expertise that each partner will dedicate to the business and how income and capital gains should be apportioned between the relevant individuals.
Anyone looking to set up a limited company is legally required to file certain forms and documents with Companies House. These include forms telling Companies House who the key individuals are in the business and the relevant addresses for the service of any documents. You will also be required to file the Memorandum and Articles of Association for the company which govern the way in which the business is managed internally and the main objects of the company.
Being a limited company also creates a need for ongoing disclosure of issues such as change of directors, change of share capital and the annual accounts.
Other documents that you should produce, regardless of your choice of entity, include agreements with clients and suppliers, leases for the premises or mortgage documents, employment contracts and any hire purchase agreements that you may be considering.
When deciding on the documents that you intend to create, think through the actual operation of your business. What documentation will you need on a daily basis? From which individuals will you need to seek advice, on a regular or even initial basis? This will give you a good idea of the types of agreements into which you should be entering. Try to create these core documents as part of the initial business set-up, rather than having to add documents in a rush, when they are needed, as this may result in key factors being overlooked.
One of the most important factors in determining the documents required will be the chosen type of business entity;
a limited company has legal requirements in terms of necessary documents, but a partnership should also consider a suitable agreement;
other issues such as client and supplier agreements and employment contracts should also be entered into from the outset.