Founders agreement, incorporation papers, IP assignment, employment contracts. Here is what you actually need in your first year, roughly what it costs, and what goes wrong when you skip it.
Legal paperwork is the part of company building that founders postpone the longest and regret the most. Nothing goes wrong for eighteen months. Then a co-founder leaves, or an investor runs diligence, and the missing document becomes the most expensive thing you never did.
Here is the realistic list for an Indian startup in its first year.
Founders Agreement. The single most important document you will sign, and the one most often skipped because the founders are friends. It covers equity split, vesting, roles, what happens when someone leaves, and who owns what if the company dissolves.
The clause that matters most is vesting. Without it, a co-founder who leaves in month four keeps their entire stake forever, and every future investor will treat that dead equity as a problem you created. Standard is four years with a one-year cliff.
Sign this before you write code together, not after the first disagreement.
Certificate of Incorporation and MoA/AoA. Issued when you register with the Ministry of Corporate Affairs. Your Memorandum and Articles of Association define what the company may do and how decisions get made. Read them once rather than filing them unread, because the AoA governs board control and share transfers.
PAN, TAN, and a current account. Mechanical, but nothing else can happen until they exist.
IP Assignment Agreements. This is the one that quietly kills deals. In India, work created by an employee in the course of employment generally vests with the employer, but contractors and freelancers are a different matter. If a friend designed your logo or a freelancer wrote part of your backend, and there is no assignment agreement, the company may not own it.
Investors check this. Acquirers check it harder. Get a signed assignment from every single person who has contributed code, design, or content, including co-founders.
Employment Contracts and Offer Letters. Even for your first hire. Include confidentiality, IP assignment, notice period, and role. A one-page offer letter with no IP clause is a liability disguised as informality.
NDAs, used sparingly. Useful with vendors, contractors, and enterprise pilots. Mostly useless with investors, who will decline to sign them and are not the risk you think they are.
Terms of Service and Privacy Policy. Not optional if you collect any personal data. India's Digital Personal Data Protection Act imposes real obligations on how you collect, store, and delete user data. Generic copy-pasted policies that describe practices you do not follow are worse than none, because they are enforceable promises.
Customer contracts or a standard MSA. For B2B, a short master services agreement that covers scope, payment terms, liability caps, and termination will save you months of per-deal negotiation.
Term Sheet, Shareholders Agreement, Share Subscription Agreement. The term sheet is mostly non-binding, but almost every number in it becomes binding in the SHA. Read the liquidation preference, the anti-dilution clause, and the board composition before anything else.
Cap Table. Not a legal document, but treat it as one. A cap table maintained accurately from day one is the difference between a two-week diligence and a two-month one.
| Item | Typical cost |
|---|---|
| Private Limited incorporation | ₹6,000 to ₹15,000 |
| Founders agreement (lawyer-drafted) | ₹15,000 to ₹40,000 |
| Standard employment contract template | ₹10,000 to ₹25,000 |
| ToS and Privacy Policy | ₹15,000 to ₹50,000 |
| Seed round documentation | ₹1.5L to ₹4L |
Templates are a reasonable starting point for the first three. They are not a substitute for a lawyer on the last one.
Do not let legal perfectionism become procrastination. In year one you need incorporation, a founders agreement with vesting, IP assignments from everyone who touched the product, and basic employment paperwork. That is genuinely most of it.
But do not use templates for anything involving outside money. The cost of a lawyer reviewing your seed documents is a rounding error against the cost of a liquidation preference you did not understand.
Founders inside LVL1 Startup School get this checklist as part of the resource library, along with the operators who have signed these documents before and can tell you which clauses actually get negotiated.