Business Legal Checkup
Can you believe it is time for your mid-year business legal checkup already? If you are anything like me, and many of the small businesses I represent, this year has been FAST so far. Even in highly productive years, it is vital to keep your pulse on the operations and the liabilities in your business. Below are a list of several legal items you can take a quick look at to see whether you might need to engage with your business attorney as we move into the second half of the year.
Business Structure and Governing Documents
Whether you run a LLC, Partnership, or Corporation of some kind, the structure is controlled by state law. Operating Agreements, Partnership Agreements, and By Laws are the foundational documents every business should have in place. Take a quick look, do you have one?
If not, it is certainly time to discuss this with an attorney. If you do, flip through the pages to review key terms. My favorites, mostly because they are the most likely to change, are:
- Are all members/owners listed on the schedule of owners or in the document?
- Has the purpose of the company shifted/changed since originally formed?
- Are the capital accounts properly reflected (you may want to consult your attorney and CPA on this one)?
- IF you have two or more members, do you have a Buy Sell Agreement? Caution, some online legal document preparers, and even less experienced attorneys fail to address Buy Sell Agreements. We strongly recommend to almost all companies with 2 or more members to have one in place.
- Are roles and responsibilities of the owners clearly defined?
Trademarks and Patent Work
If you want to secure your business name and reputation, at some point you will likely want to file for trademarks. The same holds true if this has been a growth year, or a rebranding year.
If you are working in any field where you routinely develop something, you may want to seek the assistance of a patent attorney. Patent attorneys help protect your invention, source code, and processes from other companies.
Licensing and Registrations
When are you up for renewal? Have any laws or regulations changed in how you get that renewal? Take a quick look and create a system to make sure you never miss a deadline for registrations. This can throw a huge wrench in your business’s effectiveness.
Legal Forms and Contracts
Do you routinely use standard forms or contracts to conduct your business? It is quite common in many businesses to do so. We recommend you review them at least twice a year to make sure these documents are addressing all your needs and legal updates. The best way to avoid a lawsuit is to have a great system of documentation. Even if you cannot avoid the lawsuit, at least you will have the evidence and a system in place to easily find it.
Employee Agreements, Handbooks, and Non-competes
Take a quick look at your source documents: i.e. Handbooks, employment contracts, and non-competes, to ensure they still address your needs. Then review your employee files to ensure they are complete. Does each employee have a signed receipt for the employee handbook? Does each employee, or each employee for which it is applicable, have a signed non-compete and/or non-solicitation agreement? What about I-9’s and other required documents.
Legal and Pseudo-Legal Matters
Insurance: Do you have it? Do you have the right coverage? Here are a few coverages many businesses will want (this list is not exhaustive, just some hot topic items)
- General Liability Insurance
- Employment Practices Liability Insurance
- Hired Non-owned Auto
- Cyber Liability
- Key Person Life Insurance
- Buy-Sell Agreement Life and Disability
This mid-year business legal checkup is not exhaustive. These are some easily identifiable legal issues that tend to require review and updates over the course of the year. There are many other legal topics you should discuss with your business attorney on a regular or semi-regular basis to ensure your business is well protected. We hope you found this legal checklist helpful.
Please contact us if you would like additional information, or you are ready to add a business lawyer to your advisory team.