5 Essential Business Documents Most Indian Entrepreneurs Ignore

Key Points:

Starting a business is both hectic and risky. Every new entrepreneur constantly wonders whether their decisions are right or wrong. In the chaos of building a company, managing operations, and handling finances, one of the most common mistakes business owners make is neglecting important paperwork. These oversights may seem small in the beginning but can create serious legal and financial complications later.

Wealth advisor Sarthak Ahuja explained that more than 90% of Indian entrepreneurs do not have even one of the five essential documents every business must maintain. These documents are crucial for clarity, legal protection, ownership rights, and long-term stability. So, let’s look at the agreements every business owner should know about.

1. Co-Founder’s Agreement

The first and most crucial document is the co-founder’s agreement or shareholders’ agreement. This is vital for any startup with two or more founders, yet most businesses rely on template Articles of Association (AOA), copied by their CA, which offer almost no protection in real situations. A proper co-founder’s agreement answers key questions: What happens if a founder leaves midway (Reverse Vesting)? How is decision-making power divided? How will shares be bought or sold if one founder stops contributing?

It clearly defines roles, responsibilities, equity ownership, decision-making authority, and exit plans. Without these details, a business can get stuck if one partner walks away while holding significant equity, making it difficult to shut down, sell, or grow the company. Ideally, this agreement should be incorporated into the Articles of Association and filed with the MCA (Ministry of Corporate Affairs).

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2. IP Assignment Agreement

The second essential document is an IP assignment agreement. In many startups, founders purchase domain names, brand names, logos, or digital assets in their personal names before the company is officially registered. Later, these assets are never transferred to the company. This becomes a major problem because if the founder who owns the IP leaves, the entire brand becomes legally inaccessible.

A company cannot be sold or valued properly if it does not own its own identity. An IP assignment agreement ensures that all intellectual property—domain names, trademarks, copyrights, product designs, and digital assets—legally belongs to the company, not an individual.

3. Privacy Policy

The third document every business needs is a privacy policy. With the introduction of strict data protection laws such as India’s Digital Personal Data Protection Act (DPDP Act), companies are now legally required to disclose how they collect, use, store, and share user data.

If your website collects emails, phone numbers, payment information, or even cookies, you must inform users about what data is being collected and why, how it is protected, who it is shared with, and what rights users have. A well-written privacy policy not only ensures legal compliance but also builds trust and transparency with customers.

4. Terms of Service (ToS)

A fourth critical requirement is the terms of service or terms and conditions, usually published on a business website or app. Although most people never read them, these terms are legally binding and protect your business from misuse, false claims, and unreasonable customer demands. They explain what your product or service includes, what it does not include, and what your company is not responsible for.

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They outline user obligations, refund and cancellation policies, limitations of liability, and the jurisdiction for dispute resolution. This is extremely important for both B2C companies and businesses serving international clients because it sets clear expectations and helps prevent legal conflicts.

5. Employment Agreement

The fifth essential document is an employment agreement or vendor agreement. These contracts define the relationship between your company and the people who work with you—employees, freelancers, or external vendors. They must include clauses related to intellectual property ownership, confidentiality, non-compete obligations, and non-solicitation.

These ensure that any work created for the company legally belongs to the business and cannot be used, shared, or misappropriated after the individual leaves. Without these agreements, a company risks losing control over important designs, code, strategies, or confidential information.

These five documents together form the backbone of a well-structured and legally protected business. While many entrepreneurs focus on growth, sales, and operations, ignoring documentation can expose them to avoidable disputes and risks. Having these agreements in place ensures clarity, safeguards your assets, and prepares your business for long-term success.

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