Launching a startup is fast-paced, fun and can feel chaotic at times. Between building your product and landing your first customers, it’s easy to overlook the legal paperwork. But putting the right documents in place from the very beginning can save you a serious headache later on.

Sorting your legal foundations early doesn’t just protect you. It also shows investors you’re credible, keeps your team aligned, and protects the business you're working so hard to build. Here are the essential contracts and tools every startup should have from day one.

1. Shareholders’ Agreement

Once you’ve incorporated and issued shares, you and your co-founders are shareholders. A Shareholders’ Agreement is the key legal document. It sets out how the company is owned, how decisions get made, and what happens if someone exits.

Why it matters: Even among close friends, assumptions can quickly turn into disputes. A proper agreement lays out the rules, reduces misunderstandings, and protects the business if someone wants out.

What to include:

• Equity split

• Roles and decision-making authority

• Vesting schedule

• Exit terms and dispute resolution

• Shareholder rights, pre-emption, drag/tag-along, and deadlock resolution

Note: Some founders sign a lightweight “Founders’ Agreement” before the company is formed, but once equity is issued and the company exists, that document should be replaced by a full Shareholders’ Agreement.

2. Articles of Association

This is your company’s rulebook. If you're registering in the UK, you’ll get a default version via Companies House, but many startups choose to customise theirs to suit how they actually operate.

Why it matters: It governs everything from issuing new shares to decision-making rules. It’s your company’s operating document and will come under scrutiny during funding rounds or legal reviews.

3. Employment & Consultancy Agreements

Whether you’re hiring employees or working with freelancers, you need clear, legally binding contracts. These cover pay, IP ownership, responsibilities, and notice periods.

Why it matters: Employment laws change regularly, especially around contractor status, remote work, and intellectual property. Poorly drafted contracts can leave you open to legal or financial risk.

Make sure contracts are watertight, clearly assign IP to the company, and reflect the latest legal standards in the UK.

4. Non-Disclosure Agreements (NDAs)

You’ll likely be sharing sensitive information with partners, suppliers, or potential investors before formal contracts are in place. NDAs are a useful document to have.

Why it matters: While NDAs aren’t foolproof, they show you’re serious about protecting your IP and set the tone in early conversations when ideas may still be vulnerable.

5. Cap Table (Operational Tool)

Your cap table isn’t a legal document, but it’s a crucial record. It details who owns what — including founders, investors, and any option holders.

Why it matters: Fundraising and exits rely on it. Mistakes here can slow deals or scare off investors. Keep it updated and investor-ready at all times.

6. Privacy Policy & Data Protection

If you’re collecting or processing personal data (and most startups do), you’ll need a compliant privacy policy and good data practices from day one.

Why it matters: Poor data practices can land you in legal trouble or damage trust. GDPR compliance isn’t optional, even for small startups.

What to do:

• Publish a clear privacy policy

• Make sure you have user consent where needed

• Know where and how data is stored

• Put controls in place to stay compliant
  
  

Tip: You don’t need to draft this from scratch. Tools like Termly.io can generate a basic policy and help you stay compliant as regulations evolve.

Final Word

You don’t need to hire a lawyer for everything, but you do need to get the essentials right. Use expert help where it counts — like shareholder or employment agreements — and lean on smart tools for the rest. That way, you’ll protect what you’re building without slowing down your momentum.