2020 is coming to an end – thank goodness. But as each year comes to a close all business owners should do a legal checkup, just like personally we should all see our doctors and have a physical checkup. Even if this was a highly productive year, it is vital to keep your finger on the pulse of the operations and the liabilities in your business. As many of us did not have a productive year, it is equally important to perform a business checkup, even if we may not like the results.
Below are a list of several legal items you can take a look at to see whether you might need to engage with your business attorney as we move into the new year.
Business Structure and Governing Documents
Whether your business is an LLC, partnership, or corporation, the structure is controlled by state law. Operating agreements, partnership agreements and bylaws are the foundational documents every business should have in place. Take a look, do you have one?
If not, it is certainly time to discuss this with an attorney. If you do, read through the pages to review key terms. Make sure you understand them and that they are correct (or still correct). The terms that are most likely to change are as follows:
- Are all current 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 property reflected (you should consult your attorney or accountant on this one)?
- If you have two or more members/owners, do you have a Buy Sell Agreement? You should.
- Are the roles and responsibilities of the members/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.
For those of you 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 Regulations
When are your licenses up for renewal? Have any laws or regulations changed in how you get those renewals? 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 effectiveness.
Legal Forms and Contracts.
Do you routinely use standard forms or contracts to conduct your business? You should review them 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.
Employee Agreements, Handbooks and Non-competes
Take a look at your company’s source documents, i.e. handbooks, employee contracts, and non-competes, to ensure they still address your needs. Note: if you do not have these documents, contact an attorney. Review your employee files to ensure they are complete. Does each employee have a signed receipt for the employee handbook: Does each employee for which is applicable have a signed non-compete and/or non-solicitation agreement? Do you have I-9’s and other required documentation for each employee?
Legal and Pseudo-Legal Matters
Insurance: Do you have it? Do you have all the correct coverages? You should also review your lease(s) and/or mortgages to make sure your insurance coverages match the requirements of those documents.
This yearly business legal checkup is not exhaustive. These are some easily identifiable legal issues that tend to require review and updates from year to year. There are numerous other legal topics that should be discussed with your business attorney on a regular basis to ensure your business is well protected. Cheers to a more profitable, productive and healthy 2021.
ABOUT JAMES LANDON
Jim Landon has practiced real estate law since 2002 and has been involved in real estate investment and construction for most of his life. Jim’s practice focuses on real estate transactions and land use.
Jim represents individuals and privately and publicly held companies in the purchase, sale, leasing, financing, and development of real property. He also represents title insurance companies on commercial purchases and refinancing transactions, as well as providing third-party legal opinions regarding Delaware law related to Delaware entities.
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