In the words of Benjamin Franklin, "an ounce of prevention is worth a pound of cure." Few places is that more evident than in the field of law, where taking proper measures to protect one's interests preeminently can ward off potentially messy situations down the road. Specifically, businesses that spend the time and resources to properly protect their interests before problems arise can limit their exposure to liabilities and lawsuits in the future. For that reason, it's important for every business owner to assess his or her exposure to legal risk from time to time and address any glaring holes in the business' risk mitigation practices.
When performing a legal audit of your business, ask yourself the following questions:
► Are you up to date on required filings, like your annual report, trademark and assumed business name renewals, business licenses and other registrations?
► Have you reviewed your operating agreement (if an LLC) or shareholder agreement and bylaws (if a corporation) within the last year to ensure they accurately reflect your business structure and operations?
► If you have employees have you assessed their status as exempt or non-exempt employees and determined your obligations to pay overtime?
► Have you appropriately classified your workers as employees or independent contractors?
► Do you have a written employment contract with each employer and a written consulting agreement with each independent contractor, and are they properly classified as employees or independents contractors?
► Do you have an employee handbook with the appropriate policies and procedures?
► Have all employees signed non-disclosure or confidentiality agreements to protect your business’ sensitive information like client lists, business practices, marketing strategies, etc.?
► Do all directors/shareholders/partners regularly hold formal annual meetings?
► Are all business decisions recorded in writing?
► Have all transactions involving the business been properly documented?
► Is your business having difficulty collecting payment from your customers?
► Does to business have written contracts with all vendors and customers?
► Have you secured your trademarks?
► Have you reviewed your insurance in the past year with your agent to ensure sufficient coverage types and amounts?
► Do you have written plans in place for your business in the event of your death?
If, after thinking about those questions you feel there are potential areas that may need to be addressed, drop us a line. Let's make sure we tackle things before they turn into expensive issues. You've worked hard to build your business, let us help protect it.
Michael F. Brennan is an attorney at the Virtual Attorney™ a virtual law office helping clients in Illinois, Wisconsin, and Minnesota with estate planning and small business legal needs. He can be reached at firstname.lastname@example.org with questions or comments, or check out his website at www.thevirtualattorney.com.
The information contained herein is intended for informational purposes only and is not legal advice, nor is it intended to create an attorney-client relationship. For specific legal advice regarding a specific legal issue please contact me or another attorney for assistance.