What Contracts Does Every Small Business Need?

Starting a business in Ohio is an exciting milestone — but too many owners focus on branding, marketing, and revenue while overlooking one of the most important foundations of a durable company: properly drafted contracts.

Unfortunately, many business disputes stem from unclear expectations, borrowed templates, or agreements that were never customized to comply with Ohio law.

The reality is simple:

The right contracts do more than protect your business — they help it operate predictably, professionally, and profitably.

Below are the core agreements that nearly every Ohio small business should have in place.

1. Operating Agreement (Required for Smart LLC Owners)

While Ohio does not legally require LLCs to maintain a written operating agreement, failing to adopt one is a major strategic mistake.

Under the Ohio Revised Code, without an Operating Agreement, your company will otherwise default to statutory rules that may not reflect how you actually intend to run your business.

A strong operating agreement establishes:

• Ownership percentages 

• Management authority 

• Voting rights 

• Profit distributions 

• Partner exit procedures 

• Succession planning 

 Just as importantly, it reinforces the legal separation between you and the company — a critical factor in preserving liability protection.

Common Ohio mistake: forming an LLC online in 15 minutes and assuming the job is finished. In reality, formation is just the beginning.

2. Customer or Client Agreement

If your business sells goods or provides services in Ohio, operating without a written client agreement creates unnecessary risk.

A properly drafted contract can:

• Clearly define the scope of services 

• Establish payment deadlines and late fees 

• Limit certain liabilities 

• Disclaim unintended warranties 

• Control where disputes are heard (venue provisions matter) 

• Reduce the likelihood of costly litigation 

Ohio courts regularly enforce well-written commercial agreements — but poorly drafted contracts often create ambiguity that leads directly to disputes.

If you have ever thought, “I assumed the client understood,” your contract likely needs strengthening.

3. Independent Contractor Agreement

Worker classification is heavily scrutinized nationwide, and Ohio businesses are not immune from audits or misclassification claims.

Even when a worker is properly classified as an independent contractor, failing to document the relationship can expose your business to:

• Tax complications 

• Wage claims 

• Ownership disputes over work product 

• Confidentiality breaches 

Your contractor agreement should clearly address:

• Scope of services 

• Compensation structure 

• Intellectual property ownership 

• Confidentiality 

• Non-solicitation protections 

• Insurance requirements 

• Responsibility for taxes 

Critical insight: Without explicit IP language, your business may not actually own what it paid a contractor to create.

4. Employment Documentation

The moment you hire employees, your legal exposure increases significantly.

Every Ohio employer should implement thoughtful employment documentation, which may include:

• Offer letters 

• Confidentiality agreements 

• Restrictive covenants (when enforceable) 

• Employee handbooks 

• Invention assignment agreements 

Courts frequently interpret unclear policies against the employer — making proactive documentation one of the most cost-effective risk-management decisions available to a growing company.

Important: Never reuse contractor agreements for employees. The legal frameworks differ dramatically.

5. Non-Disclosure Agreements (NDAs)

Most businesses possess valuable confidential information — even if they do not initially recognize it.

This often includes:

• Client lists 

• Pricing models 

• Marketing strategies 

• Financial data 

• Proprietary processes 

An NDA helps establish trade secret protection and strengthens your ability to act if sensitive information is misused.

Timing matters: The agreement should be signed before confidential information is shared. Not afterward.

6. Buy-Sell Agreement (Essential for Multi-Owner Businesses 

If your company has multiple owners, a buy-sell agreement is one of the most important documents you will ever sign.

It prepares your business for events such as:

• Death 

• Disability 

• Divorce 

• Bankruptcy 

• Ownership disputes 

• Voluntary exits 

Without one, Ohio law may determine what happens next — and the outcome is rarely ideal.

It is entirely possible to find yourself in business with a former spouse or an heir who has no operational experience.

A well-crafted agreement creates clarity, stability, and continuity.

7. Personal Guarantee Review

Many Ohio business owners are surprised to learn that landlords, lenders, and vendors frequently require personal guarantees.

In plain terms:

If the business cannot pay, you may be personally responsible.

Before signing, it is wise to evaluate whether the guarantee can be:

• Limited in scope 

• Capped financially 

• Reduced over time 

• Shared among owners 

• Triggered only under specific conditions 

These terms are often more negotiable than business owners realize.

Contracts Are Not Just Legal Protection — They Are Strategic Infrastructure

Sophisticated entrepreneurs understand something that newer owners often miss: Contracts are operational tools.

Well-drafted agreements help your business:

• Prevent misunderstandings 

• Strengthen negotiating leverage 

• Protect revenue 

• Reduce litigation risk 

• Improve lender confidence 

• Increase long-term enterprise value 

In short, they transform a vulnerable business into a resilient one.

When Should Ohio Business Owners Put These Agreements in Place?

Earlier than most expect.

One of the most common calls attorneys receive begins like this:

“Everything was going fine… until it suddenly wasn’t.”

By the time a dispute arises, your leverage is usually diminished.

Proactive legal planning is almost always less expensive — and far less stressful — than reactive damage control.

Protect Your Business Before Problems Arise

Whether you are launching a new venture, adding a partner, hiring your first employee, or preparing for growth, the right contracts can dramatically reduce risk while positioning your company for long-term success.

At New Ridge Law, we help Ohio entrepreneurs and small business owners build strong legal foundations so they can focus on growth with confidence.

A short conversation today can prevent a costly dispute tomorrow.

📞 Contact us today to schedule a consultation with an attorney from New Ridge Law. We will help identify gaps, reduce exposure, and ensure your company is structured to withstand real-world challenges.

This article is for general informational purposes only and does not constitute legal advice. For specific guidance, please consult an attorney licensed in your jurisdiction.