We crunched the numbers: the five contracts startups actually buy in their first year

Starting a business is exciting - but figuring out which legal documents you actually need can feel overwhelming. It’s not always obvious what’s essential now versus what can wait, and most startups can’t (and shouldn’t) try to get every contract under the sun on day one.

A smarter approach is to start with the documents that protect your biggest risks in the first year, then build from there as your business grows.

The best way to work out what you need is to speak with a legal expert and get advice tailored to your business model. But while you’re doing your research, it helps to know which contracts many startups tend to prioritise early - and why.

Below are the five we see most often in a startup’s first year, written with a UK-specific lens.

1) Your website documents: privacy policy and website terms

Most startups go live online early - even if it’s just a landing page, a waitlist form, or a basic “coming soon” site. The moment you collect names, emails, analytics data or enquiries, you’ve stepped into privacy territory.

In the UK, privacy is governed primarily by the UK GDPR and the Data Protection Act 2018. And there’s a second layer many startups miss: the Privacy and Electronic Communications Regulations (PECR), which sit alongside data protection law and include specific rules around cookies and electronic marketing.

A Privacy Policy is essentially your public explanation of how you handle personal information - what you collect, why you collect it, how long you keep it, and who you share it with (including overseas providers where relevant). It should also help meet the UK transparency requirement to tell people what you’re doing with their data.

Website Terms (often called Terms of Use) do a different job: they set ground rules for how people can use your site, what content belongs to you, and how you manage risk around things like third-party links, user behaviour, and limitations of liability. They won’t eliminate all risk, but they’re a practical way to reduce misunderstandings and give you a clearer footing if issues arise.

A common first-year mistake: copying terms from another website. It feels quick, but it can leave gaps (or create problems) if the wording doesn’t match what you actually do.

2) People contracts: employment agreements and contractor agreements

Hiring is often a turning point in a startup’s first year - and it’s also where legal risk can creep in quietly. A founder might bring someone on “just for a few months” or “just to help get it off the ground,” but informal arrangements have a habit of becoming long-term relationships. When things change, that’s when ambiguity gets expensive.

For employees (and often “workers”), you’ll usually want a clear Employment Contract covering duties, confidentiality, intellectual property and termination. In the UK, employers must also provide a written statement of employment particulars setting out key terms at the start of work.

For contractors, a Contractor Agreement is just as important - but for different reasons. It clarifies scope, payment, ownership of work, confidentiality, and exit terms. It can also reduce the risk of disputes about whether work belongs to the business or the contractor.

This matters because in the UK, “contractor” isn’t just a label. If the relationship looks and operates like employment (or “worker” status), there can be serious consequences. And if you engage contractors through intermediaries (for example, personal service companies), there may also be off-payroll/IR35 considerations depending on your situation.

3) Your money contract: a client services agreement

In year one, cash flow is everything - and for service-based startups, the client relationship is where many disputes start. Not because anyone is acting badly, but because expectations weren’t written down clearly enough.

A Client Services Agreement (sometimes paired with a Statement of Work) puts structure around what you’re delivering, how much it costs, when payment is due, what happens if the scope changes, and what the client needs to provide for you to do your job.

This is also where you manage risk - for example, through clear limitations of liability, sensible disclaimers where appropriate, and practical dispute resolution processes. In the UK, you need to do this carefully:

• If you contract with consumers, consumer protection laws can apply (including rights under the Consumer Rights Act 2015 that generally can’t be excluded); and
  
• In some business-to-business contexts, exclusions and limitations may need to satisfy a “reasonableness” test under the Unfair Contract Terms Act 1977.
  

A common scenario: the client wants “just one more change” … and then another … and then another. With a solid agreement, you can point to a change process instead of absorbing endless unpaid work.

4) The founder contract: a shareholders agreement

A lot of founders assume they’ll “sort it later.” But later is usually when pressure arrives - investment conversations, a co-founder leaving, disagreements about direction, or questions about who owns what.

A Shareholders Agreement sits underneath the business and governs the relationship between owners. It deals with the issues that don’t show up on day one, but tend to show up when the business has something to lose: decision-making, exits, deadlocks, issuing new shares, and what happens if someone wants to step away.

In the UK, the Companies Act 2006 and your company’s articles of association (often based on the Model Articles) provide default rules - but they often don’t address the founder-specific realities that cause disputes. A shareholders agreement is where those expectations get spelled out while everyone is still aligned.

This is one of the most common “we wish we did it earlier” documents we see, because once relationships are strained, negotiating this kind of agreement becomes much harder.

5) The asset-protection contract: an IP assignment

For many startups, the most valuable thing they own isn’t cash - it’s intellectual property: the brand, the website, the code, the designs, the content, the product name, the systems behind the service.

The tricky part is that ownership isn’t always automatic.

In the UK, copyright generally belongs to the creator, and employees creating work in the course of employment will often mean the employer is the first owner of copyright (subject to any agreement to the contrary). But contractors are different: unless your contract says otherwise, the contractor may retain key IP rights.

That’s why an IP Assignment (or properly drafted IP clauses within your contractor and employment agreements) is so important early. It becomes especially critical when you raise capital, enter partnerships, or sell the business - because due diligence tends to spotlight IP gaps very quickly.

One UK-specific point worth knowing: a copyright assignment isn’t effective unless it’s in writing and signed by (or on behalf of) the person assigning it.

A common first-year misunderstanding: “We paid for it, so we own it.” That’s not always true without the right written terms.

A few extras many startups add soon after

Once the core documents are in place, many startups also look at a couple of practical add-ons depending on how they operate. NDAs can help when you’re sharing genuinely confidential information with a third party (although they’re often overused). Supplier or vendor agreements matter if your business relies heavily on a key external provider. And if you sell products online or offer subscriptions to consumers, clear terms of sale and refund/cancellation information are essential - particularly because UK consumer law shapes what you can and can’t say about refunds and cancellations.

The takeaway

There’s no one-size-fits-all list - your “first five” will depend on how you make money, how you deliver your product or service, and whether you’re hiring or partnering early.

But in most first-year startups, these documents show up again and again because they protect the same essentials: your customer relationships, your people, your ownership structure, and the assets you’re building.

If you’re unsure which documents make sense for your business, you can reach us at 08081347754 or team@sprintlaw.co.uk for a free, no-obligations chat.