What Are Pre-Incorporation Agreements?

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August 05, 2021
By Andrew David Easler, Esq.

All businesses are started with an idea, and it only takes one person to believe in that idea before business planning commences. Before any work can be done to make that idea a reality, it is very important that some pre-incorporation planning take place.

The pre-incorporation agreement is an essential business plan template which has the potential to save small businesses and their owners from a great deal of trouble down the road.

If you are someone who would like to incorporate a new business, pre-incorporation planning is one of the most important aspects of starting up an enterprise that you will need to take into account the following:

  • An agreement between potential partners and shareholders must be drawn up before incorporation even takes place. This pre-incorporation agreement outlines all of the details regarding how the company should be started and how it should be run in the future.
  • The pre-incorporation agreement outlines who will own what and how profits will be split for all parties involved. It also ensures that each party understands their role in the company, their rights and responsibilities as well as any compensation or benefits they are to receive during their time with the company.
  • A pre-incorporation agreement will also lay out the specific reasons why someone should be leaving their current occupation to start a business. It makes clear who is in charge and what each party can expect along the way.
  • A pre-incorporation agreement serves as an excellent road map for all those involved with starting up a business venture, and for those who have already begun a new enterprise.
  • A pre-incorporation agreement should be put together carefully in order to protect future business partners and their respective investments.  By drawing up an agreement, the parties involved can ensure that everything is fully understood before any decisions are made.
  • It may also provide some peace of mind for all those involved when a pre-incorporation agreement is in place. The pre-incorporation agreement helps to protect all parties involved and their respective assets, while laying out the details regarding how profits will be split as well as any compensation or benefits that will be received along the way.
  • Without a pre-incorporation agreement in place it is very important to speak with an attorney who will help guide you through the pre-incorporation process.
  • A pre-incorporation agreement outlines how the company should be started in accordance with pre-determined rules which will protect all parties involved and their respective assets. It lays out all of the details regarding how profits are supposed to be split and who will be in charge of which areas of the company.
  • A pre-incorporation agreement serves as an excellent prelude to all those involved with starting up a business, and for everyone who is already working to make their idea into a reality. A pre-incorporation agreement can help to prevent major problems down the road and it is one of the most important pre-incorporation planning steps that you will need to take into account.

If you are someone who would like to incorporate a new business, pre-incorporation planning is one of the most important aspects of starting up an enterprise that you will need to take into account the following:

  • A pre-incorporation agreement outlines all of the details regarding how the company should be started and how it should be run in the future and also outlines who will own what and how profits will be split for all parties involved.
  • A pre-incorporation agreement will also lay out the specific reasons why someone should be leaving their current occupation to start a business. It makes clear who is in charge and what each party can expect along the way.
  • A pre-incorporation agreement serves as an excellent prelude to all those involved with starting up a business, and for everyone who is already working to make their idea into a reality. A pre-incorporation agreement can help to prevent major problems down the road and it is one of the most important pre-incorporation planning steps that you will need to take into account.
  • In order for a pre-incorporation agreement to be written up properly, each party needs to work closely with an experienced business attorney who understands how pre-incorporation agreements work.
  • A pre-incorporation agreement outlines how the company should be started in accordance with pre-determined rules which will protect all parties involved and their respective assets. It lays out all of the details regarding how profits are supposed to be split and who will be in charge of which areas of the company.
  • A pre-incorporation agreement serves as an excellent prelude to all those involved with starting up a business, and for everyone who is already working to make their idea into a reality. A pre-incorporation agreement can help to prevent major problems down the road and it is one of the most important pre-incorporation planning steps that you will need to take into account.
  • An agreement may also provide some peace of mind for all those involved when a pre-incorporation agreement is in place. The pre-incorporation agreement helps to protect all parties involved and their respective assets, while laying out the details regarding how profits will be split as well as any compensation or benefits that will be received along the way.
  • A pre-incorporation agreement will help to lay out all of the details regarding how the company should be started and how it should be run in the future. It makes clear who is in charge and what each party can expect along the way.

It’s important to remember, that all pre-incorporation agreements should pre-determine how the company should be run and what rules everyone will follow, if this is absent there is a good chance that major problems will develop with partners later on. That being said, a pre-incorporation agreement serves as an excellent prelude to all those involved with starting up a business, and for everyone who is already working to make their idea into a reality. A pre-incorporation agreement can help to prevent major problems down the road and it is one of the most important pre-incorporation planning steps that you will need to take into account.

In order for a pre-incorporation agreement to be written up properly, each party needs to work closely with an experienced business attorney who understands how pre-incorporation agreements work. Do not rely on legal aid or online pre-prepared pre-incorporation agreements. They do not know how pre-incorporation agreements work and could end up costing you and the business a great amount of time and money down the road.  If you have any questions about pre-prepared pre-incorporation agreements or pre-incorporation agreements in general, contact a business attorney.

The information on this page may have changed since we first published it. We give great legal advice, but this page (and the rest of our site) is for informational use only and is no substitute for actual legal advice. If you’d like to establish an attorney-client relationship, reach out to us and we’ll tell you how we can make it official. Sending us an email or reading this page alone doesn’t mean we represent you.

Easler Law®