5 Legal Documents Every Small Business Needs

Starting a business is exciting, but skipping the legal fundamentals can put everything you've built at risk. Too many entrepreneurs launch without the documents that protect their personal assets, define their business relationships, and keep them compliant with state law.

Here are the five legal documents every small business should have, and why each one matters.

1. Operating Agreement (LLC) or Bylaws (Corporation)

If you've formed an LLC, an operating agreement is essential, even if you're the sole member. This document defines how your business is managed, how profits and losses are distributed, and what happens if a member leaves or the business dissolves. Without one, your state's default LLC rules apply, and they may not match your intentions.

For corporations, bylaws serve a similar purpose, outlining governance procedures, officer roles, and shareholder rights.

2. Independent Contractor Agreement

If you work with freelancers, consultants, or any non-employee workers, you need a clear contractor agreement. This document defines the scope of work, payment terms, intellectual property ownership, and confidentiality obligations. More importantly, it helps establish that the worker is genuinely an independent contractor. Misclassification can result in significant tax penalties and liability.

3. Non-Disclosure Agreement (NDA)

Whether you're sharing business plans with potential investors, discussing proprietary processes with vendors, or hiring contractors who'll access sensitive information, an NDA protects your confidential information. A well-drafted NDA clearly defines what information is confidential, how long the obligation lasts, and what remedies are available if it's breached.

4. Terms of Service and Privacy Policy

If your business has a website (and it almost certainly does), you need terms of service and a privacy policy. Terms of service govern how users interact with your site and limit your liability. A privacy policy is legally required in most states if you collect any personal information from visitors, even just email addresses for a newsletter.

5. Employment Agreement

When you're ready to hire your first employee, a clear employment agreement sets expectations from day one. It should cover compensation, benefits, job responsibilities, confidentiality, non-compete provisions (where enforceable), and termination procedures.

Getting These Documents Right

Template documents from the internet might seem like a cost-effective solution, but they often miss state-specific requirements, contain outdated clauses, or simply don't fit your situation. A professionally prepared document tailored to your business and state costs far less than fixing a problem caused by a bad template.

LegalAgento's document drafting service prepares all of these documents with AI-powered initial drafts reviewed and customized by a licensed attorney, starting at just $75.