6 Important Documents Every Business Must Have!

A business cannot function without business documents. What documents do you use for your business to protect yourself and ensure the smooth running of daily business transactions?

A business requires a specific list of documents to buy and sell products, to communicate, to understand how to be more efficient, to manage a business and to operate one. It is safe to say that a business cannot run properly without business documents.

This article will tell you what the Top 6 Documents your business absolutely needs, to benefit you as an employer.

  1. Employment Contracts

An employment contract should always be drafted and implemented to protect your business and manage your associations with your employees. It is essential that your contract has all the important clauses to protect you as a business while still being fair to your employee. A terrific employment contract must have clauses that specify and outline:

  1. Role being offered – position of the role, location of the role;
  2. Responsibilities of the role;
  3. Type of employment of the employee: full time, part-time, fixed term or casual.
  4. Salary and the benefits;
  5. Working Hours;
  6. Leave entitlements;
  7. That the employee is required to sign a Confidentiality and Invention Assignment Agreement;
  8. Intellectual property rights and obligations;
  9. Scheduled performance reviews and criteria;
  10. That any disputes will be handled exclusively by confidential binding arbitration except for designated types of disputes, such as those related to worker’s compensation.

Choosing a legal specialist will ensure you have comprehensive and legally accurate contracts of employment in place to protect, not only you as an employer, but also as protection and an incentive to your employees. When boundaries are clear and employees know what is expected of them, they are more likely to add value to your business.

  • Job Description

A job description is a statement that outlines the specifics of a particular job or position with a company. It goes into detail about the responsibilities and conditions of the job. Having a proper job description in place will establish a robust set of expectations for you to communicate to your employees. When your employees have a concrete understanding of their responsibilities, they will work more efficiently and effectively in their respective roles.

When drafting your job description document you should highlight the following:

  1. The definition of the job – this can include the tasks the employee needs to undertakes, the skills, experience and abilities needed to perform the role, the qualifications needed and the responsibilities the employee will have;
  2. The type of employment – specify whether the position is full-time, part-time, fixed-term or casual. This is important because it will determine the employee’s pay and conditions.
  3. Location – specify the location the employee will be employed at;
  4. Supervisor/Manager – specify who the employee will report to; and
  5. Performance Goals – specify the level of performance you expect from the employee.

Essentially, a detailed, up-to-date job description for each employee and position, benefits the employer, the employee and the business by providing structure and clarity.

  • Tax File Number

Everyone who must pay tax in Australia needs a Tax File Number (TFN). This is a nine-digit number issued by the Australian Taxation Office (ATO). The type of TFN your business needs and how you’re taxed will depend on your business structure. The types of business structures that will define the type of TFN you need are:

  1. Sole trader;
  2. Partnership;
  3. Company; and
  4. Trust.

If your business has a turnover of more than $75,000 is also required to register for GST and submit Business Activity Statements. You also must register for GST if you want to claim fuel tax credits or GST credits.

If your business has employee, it will also need to register for PAYG. This means that the business will need to withhold tax and remit it to the ATO on behalf of its employees, directors and office holders.

You can apply for a TFN, GST and PAYG together at https://www.abr.gov.au/

  • Confidentiality Agreements

The Confidentiality Agreement or NDA (Non-Disclosure Agreement) is a legal agreement between at least two parties regarding the use and disclosure of certain non-public information, which is usually proprietary.

It outlines the restrictions from wider use, public disclosure, and distribution. This means that the person or business that signs the NDA has to treat the specific information as a trade secret.

Under an NDA, a person or entity cannot disclose confidential information to others without proper authorization from the other party. At the same time, the owner of the confidential information has to be active in keeping the information secret as well.

The purpose of nondisclosure agreements is to create a confidential relationship between the parties involved in order to facilitate a business transaction.

There are also unilateral confidentiality deeds. For example, an agreement or clause is usually required of a new employee especially one that has access to marketing plans, potential customer list or investors, business reports, financial documents, and other valuable information

A good Confidentiality Agreement lays out the recipient’s confidentiality obligations, the exclusions from the confidentiality (such as information already in the public domain), how long the confidentiality obligation lasts, limitations on the use  of the information, and the right of the disclosing party to seek injunctive relief to stop the other side from disclosing the information.

  • Shareholders Agreement

Although a company constitution can act as a safeguard in unforeseen and unfortunate scenarios, having a well-drafted shareholders agreement ensures better protection for shareholders. The agreement can set out:

  1. the shareholders’ rights, obligations, and liabilities;
  2. how important decisions are made;
  3. how the sale of shares and transfers are controlled;
  4. how the company raises capital;
  5. how you will execute your company’s business; and
  6. what measures will be taken when an investor leaves the business.

Instead of using a generic shareholders agreement, draft an agreement based on your company’s needs and where the agreement establishes a fair working affiliation and protects each one’s investment.

  • Service Agreement

A Service Agreement is also known as a:

  1. Contractor Agreement;
  2. Consultant Agreement; or
  3. General Service Agreement.

A Service Agreement should be a written contract between a service provider and a client that outlines the terms of their professional affiliation. A Service Agreement specifies the details of the service provided, the parties involved, billing and payment information, and any other necessary terms. It’s strongly recommended you use a written Service Agreement when establishing a work relationship between a client and a contractor so that all terms and expectations of both parties are not vague but rather clear, confirmed and ensures both parties are protected by agreed terms if a dispute arises.

Now before I wrap up, I want to ask you; does your business have the documents it needs for smoother running and protection?

No matter what business structure you are operating, having the proper legal documents in place will be a huge advantage.

The right legal documents will help you prevent numerous problems that can arise in any business.

It will also mean that you and your business will be able to avoid misunderstandings and disputes that can drain your business of its resources and lead to expensive lawsuits.

Persevere to be the best and do the best; make sure your business has these essential documents implemented to safeguard yourself as an employer!

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