Legal documents are the documents which any business and smart entrepreneur must acquire to protect his/her business from risk like business closure, crime fines, and penalties.
In this article, I list 10 legal documents which your business or startup must have – their description and importance.
1) A Business Plan.
A business plan is not often regarded as a legal document but it is one of the most important documents which every business should have. A business plan embodies or encapsulates the goals, progress, and growth of a business. It helps to keep the record of a business and serves as a guide for the business.
2) Importation and Exportation Permit.
Most entrepreneurs have problems with customs when importing and/or exporting their goods because they don’t have this permit. Importation and Exportation Permit is a legal document which allows you company to import and/or export goods in and/or out of the country.
3) Tax Licenses:
Tax License is a legal document often issued by the Federal Inland Revenue Services (FIRS) and other tax regulatory bodies and agencies at the State and Local Government levels across states of the federation. This document shows that your business is eligible to and pays (or does not pay) tax regularly.
Taxation on business is important and your business commits a huge offence in the country if it refuses to pay the stipulated tax which it has to pay. Failure to pay tax (i..e, tax deferment) and on time attracts fines and penalties when caught. Therefore, a smart entrepreneur must obtain his/her tax licenses and pay the stipulated taxes as a good citizen of the country.
4) Service Agreement.
A service agreement is a legal document that spells out the relationship between a business owner and the customer or client. This document defines the role of both parties relating to the transaction that (will) take place between them.
5) Business Registration Certificate.
A Business Registration Certificate is a very important legal document issued by the Cooperate Affairs Commission (CAC) when your business is registered. It shows that your business is fully registered under the law and that your business legally bears that name for which it is registered. Also, it show that you as the entrepreneur is the certified business owner of the business. Furthermore, your Business Registration Certificate allows you to have access to bank and government loans. The Business Registration certificate is also known as Certificate of Registration/Incorporation. It is different from Business Certificate Of Incorporation.
6) Signage Permit.
A Signage Permit is a legal document that allows you to erect a signpost to advertise your business. It helps to prevent illegal construction of signposts across the country. A Signage Permit is usually issued by the signage and advertisement agency under state government.
7) Employee Agreement.
An Employee Agreement document also known as Employee Contract is a legal document, a form of agreement between the employer and the employee. It shows the roles, obligations, duties, activities, and functions of each of them.
Employee Agreement is a compulsory document every entrepreneur or aspiring entrepreneur that wants to be an employer of labour must have. This helps to prevent employers from the risk of being sanctioned and also protects employees from being maltreated or cheated on which can hamper the growth of the business.
8) Partnership Agreement:
A Business that runs a Partnership is required to obtain this legal document. It helps each partner know their duties and obligations and it also helps to spell out the partnership between the business owners. It is a mandatory legal document for Partnership and not for Sole Proprietorship. Also, it helps to seal the agreement between the two parties.
9) Constitution of the Company.
This legal document serves as a guide, a working or operating manual for a company or business. It is often regarded as the “Bible” of the company. All businesses require a constitution whether the business is a small-scale, medium-scale or a large-scale business.
The Company or Business Constitution contains the aim, goals, mission, vision, and objectives of the Company or business. It can speak for the company anywhere because everything about the company is fully and clearly stated in its constitution.
10) Unrevealed Agreement.
It is also known as Non-Disclosure Agreement. All business ideas are unique and must be treated as confidential. Non-disclosure agreement is a legal document that helps to seal ones business idea i.e. it keeps ones business idea secret even when shared with another party or parties. This document helps to treat ones idea as a confidential matter which must not be shared with any else. It is a cordial agreement between the parties involves. All business idea is unique.
Most times, when looking for funding from an Angel Investor or Venture Capitalist, it is required that you open up on your business idea or concept. Before you do that, it is needful that you and the Angel Investor or Venture Capitalist sign this Non-Disclosure Agreement or Unrevealed Agreement. This helps to keep your business idea or concept private even if you don’t get the needed support from the third party.
By the way, if you are looking for funding for your business or business idea, here is a list of Venture Capitalists in Nigeria that you may approach for funding and support.
11) Internal Revenue Permit.
This is a legal document issued by the Internal Revenue Services (IRS) department of the Local Government Area that you are operating in. If you own a physical office like a Shop, a Factory or Workshop where you run your business from, it is mandatory that you obtain your Internal Revenue Permit. The severity of enforcement depends, however, on the State in the Nigeria where is your company/business is located in. The Internal Revenue Permit is required before you can acquire or build a physical office in most states of the Federation.
12) Insurance Certificate.
Although not fully applicable or enforced in Nigeria and most of the businesses operating here, in foreign countries, it is compulsory for all business to be insured. It is an indication that you have secured your business. A smart business owner or potential business owner must obtain an Insurance Certificate to secure the future of his/her business in Nigeria against any unplanned circumstance like Fire Outbreak, War, Flood, Burglary, etc.
There are other legal documents that your business must have, depending on the State and Local Government Area where your business is located in Nigeria.
These documents include
- Volunteer/intern agreement
- Industrial license
- Intellectual property license
- Professional permit and many more
In conclusion, a smart business/aspiring business owner, an existing business, or a startup, it is important that you obtain all the necessary legal documents that will help you and your business to staff out of trouble and protect the interest of your business and the public. The obtainment of these legal documents must be included in your business plan. These documents, permits, and licenses differ from State-to-State and Local Government Area to Local Government Area. Therefore, ensure that you make the necessary enquiries on which are useful to get for your business.