If you have started a business, you will have some new legal obligations, especially if you are setting up online. We met with Karl Hutchinson, co-founder of Plugged.ie to discuss how to tackle important legal documents for businesses. Karl assured us that putting these documents in place doesn’t have to be expensive, and that they don’t have to be complex or difficult to understand. In this article, you will see what documents are a legal necessity and which are just good practice to have in place. This will give you a good idea of which documents to start with.
We have outlined the top 10 most important legal documents for your business in simple terms. Our team is happy to help with documents like your shareholders’ agreement, or you can get in touch with Karl directly for more guidance.
Important legal documents
This article will take you through the importance of:
2. Website terms of use
Website terms of use lay out the rules people must agree to to use your website. If you allow users to contribute to your website, for example, by leaving comments, your terms of use will state what kind of content is acceptable and what is prohibited.
Is it a legal requirement?
You are not legally required to have website terms of use, but Karl recommends having them to protect your business.
Why is it important?
Your terms of use should include a disclaimer and limitation of liability statement. This means that if a user suffers losses through using your website, they cannot hold your company liable to pay the damages. For example, if a user clicks a link on your comment board that causes a virus your terms of use can prevent you being held liable for the damage caused.
3. Terms and conditions
Your terms and conditions are similar to your website terms of use and many businesses decide to combine these two documents into one. Your terms and conditions establish a legal binding contract between you and your clients which they must agree to before purchasing from you. They include details of your company, like your name and registered address in Ireland, and describe what you are selling and the terms you agree to sell them under, for example:
- The goods or services you provide
- Who you provide goods and services to
- How you provide goods and services
- Your business’ payment and delivery terms
- Your business’ return and refund policy
Is it a legal requirement?
Not necessarily. However, you are legally required to provide your online customers with certain information, such as your company details and the customer’s rights when buying from you. The best place for this information is usually in your terms and conditions.
Why is it important?
Having a clear set of terms and conditions can help make it clear when they have been breached, for example, if a client fails to pay within the timeframe laid out on their terms. Terms and conditions can help protect your business. For example, they make it clear if and when a client or customer is entitled to a refund, which can avoid legal disputes. Having a clear set of terms and conditions can save you on the legal cost of disputes in the long run.
4. Privacy policy
Your privacy policy will lay out how you handle, store and potentially share your users personal data, such as names, email addresses, and credit card details. Users are entitled to know how their data is being stored and used.
A web developer can provide you with a template for your privacy policy. However, you should make sure the template is relevant for Ireland, as many of these templates focus on US or UK privacy laws, which will differ to EU and Irish laws.
Is it a legal requirement?
If you have a website you are required to have a privacy policy, under General Data Protection Regulation and e-privacy laws.
Why is it important?
A privacy policy is a legal requirement. If you don’t have one for your website you could be in breach of GDPR or other privacy laws, and you could be fined.
5. Cookies policy
Digital cookies track the websites you visit and what you click on these websites. Under EU law your cookies policy must use simple language to tell users:
- What cookies are
- What cookies you use
- What you use the cookies for
- How they can opt out of tracking or adjust settings
For example, some cookies track what pages an individual visits on your website. This can help you track which pages are doing well versus which pages need to be optimised. Cookies can also track where users come from. This is helpful if you run ads for your business because it can show you how well your ad campaigns are working. However, some users will not want you recording this information about them.
Is it a legal requirement?
If you run a website and collect cookies, you legally have to let your website visitors know that you are doing so and tell them what you are doing with this information.
Why is it important?
A cookies policy is a legal must-have for businesses in the European Union and you can face tough fines if you fail to implement a cookies policy for your website. A detailed cookies policy also allows you to respect your users privacy and only track data if they want you to do so.
6. Contracts
Contracts are legally binding agreements between 2 or more parties. We have laid out some common partners you should have contracts for below.
Agency agreement
An agency is someone who sells your goods or services in your name and on your behalf, usually in return for commission. In this case, the seller doesn’t take responsibility for the goods they sell. That means if there is a problem with the goods, the liability rests with you so consumers can come to you directly for a solution or refund.
Distribution agreement
A distributor is someone who buys your goods to sell on to their customers for a profit. That makes the distributor your customer. Once they pay for the goods, they take full ownership and take on all the liability of selling the goods. This means if a customer doesn’t pay for goods they buy on credit, it is the distributor who will take a loss.
Licensing agreement
In a licensing agreement, you pay to use Intellectual Property that belongs to someone else. For example, if you were making merchandise with cartoon characters printed on them you would need to have a licensing agreement with whoever owns the rights to those characters (the licensor) and pay them a fee called a royalty.
Is it a legal requirement?
In some cases, contracts are a legal requirement. However, in others, they are good practice and can help you avoid.
Why is it important?
Having contracts can help make the terms of any agreements you have with other parties clear and avoid disagreements down the line. It also gives you some protection if relationships with other parties break down in the future.
While these documents will help you set the legal framework of your business, another crucial aspect that should not be overlooked is bookkeeping advice for startups and small businesses in Ireland. Good bookkeeping practices will ensure financial stability and compliance.
7. Contractor agreements
Contractor agreements lay out the rules for people who do work for you or your business but are not directly employed by you. Contractors might include:
- Software developers
- Website developers
- Business consultants
If you are working with software or website developers, your contractor agreement should lay out who owns the Intellectual Property rights for what they create. For example, unless a contract states otherwise, the person who creates content automatically owns it. This means that without a contractor agreement your website developer could end up owning the rights to your website even though you paid them to create it.
Is it a legal requirement?
Having a contractor agreement is not a legal requirement but it can help avoid future issues and offer protection over important assets like your website.
Why is it important?
Contractor agreements outline the terms of the working relationship between you and your contractor. It should clearly state that the contractor is not an employee of your business. This is important because you have certain obligations to employees, such as paying tax on their behalf and providing employment contracts.
8. Intellectual Property (IP) assignment
An Intellectual Property (IP) assignment lays out how the ownership of content that you pay for someone to create for you transfers to you. For example, you might hire a website developer to create your website for you. An IP assignment would lay out how and when they will transfer ownership of the new website to you.
Is it a legal requirement?
This is not legally requirement but it is a good guarantee that any external agencies you work with will sign over the rights to the work you pay for.
Why is it important?
You might outsource the creation of important business assets (such as your website) to a professional with experience. These assets are important to the success of your business so you will want to have full control and ownership over them.
9. Employee agreements
If you have employees they are entitled to have an employment contract. This will include information such as what hours they will be expected to work, whether they will be full-time or part-time employees, whether there is a fixed end date to their employment and how much they are to be paid, and how often.
Is it a legal requirement?
Yes, if you have employees, you are legally required to provide them with an employee agreement. Directors are also entitled to an employment contract and even if you are the sole director of a Limited Company you are legally required to give yourself an employment contract, since the company is considered a separate legal entity.
Why is it important?
Employee agreements are a legal requirement if you are going to hire employees. You can find template employee agreements online and change them to suit each individual employees.
10. Confidentiality agreements
A confidentiality agreement lets you share sensitive information with other people with the agreement that they will not share this information. You might use this when:
- Your employees have access to sensitive information about your clients, such as their contact details
- You are collaborating with another company on a project that requires you to share with each other
- You are outsourcing to agencies, such as an advertising agency, and need to share information about your target audience
Is it a legal requirement?
Confidentiality agreements are not legally required but they allow you to protect important business information.
Why is it important?
Confidentiality agreements let you work with other people without worrying about losing sensitive information that’s important to run and grow your business.
In summary...
As a business owner, there are some legal documents you will need to put in place. We hope this article has shown that they don’t have to be complex or difficult.
If you want more advice about legal documents for your specific business situation you can email Karl Hutchinson from Plugged.ie at karl@plugged.ie
We want to support you at any stage of your business journey – if you have questions or need advice, talk to a member of our award-winning team today.
Kelly is the Marketing Manager at Accountant Online. Kelly is passionate about making the complexities around running a business simple to understand and accessible to the every-day person. Kelly holds a Bachelor of Science (BSc) in Marketing from Dublin Institute of Technology.