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 an Australia-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 Australia, privacy is governed primarily by the Privacy Act 1988 (Cth) and the Australian Privacy Principles (APPs). Not every small business is covered by the Privacy Act, but some are - and many startups choose to publish a Privacy Policy early anyway because it builds trust and avoids scrambling later when the business grows, takes investment, or starts running more sophisticated marketing and customer systems.

A Privacy Policy is essentially your public explanation of how you handle personal information - what you collect, why you collect it, where you store it, and who you share it with (including offshore providers).

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, an Employment Agreement helps set expectations around duties, confidentiality, intellectual property, and termination. In Australia, it also needs to sit alongside the Fair Work Act 2009 (Cth), the National Employment Standards (NES) and any relevant Modern Award. In other words: even with a contract, you can’t contract out of minimum legal entitlements.

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 Australia, “contractor” isn’t just a label. If the relationship looks and operates like employment, there can be serious consequences - including claims for employee entitlements and other legal risk. A well-drafted agreement won’t fix a misclassification on its own, but it’s often a key part of getting the structure right from the start.

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, disclaimers where appropriate, and practical dispute resolution processes. And in Australia, this needs to be done carefully because the Australian Consumer Law (ACL) (in the Competition and Consumer Act 2010 (Cth)) can imply consumer guarantees in certain situations - including in some B2B settings - which can’t simply be “signed away” with a broad clause. The goal isn’t to make the contract harsh - it’s to make it clear, fair, and workable.

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 Australia, the Corporations Act 2001 (Cth) and your company constitution 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 Australia, copyright often belongs to the creator. Employees creating work in the course of their employment will often vest IP in the employer - but contractors are different. If a contractor builds your website, writes your code, designs your logo, or creates your marketing assets, you don’t want ownership to be ambiguous.

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.

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, clear terms of sale and refund policies are essential - especially because the ACL’s consumer guarantees shape what you can and can’t say about refunds.

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 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.