As a business owner, you focus on generating revenue and creating profit by controlling expenses to add profit to the bottom line. By increasing revenue and controlling costs, you create a profitable business. However, in the day-to-day operation of your business, you may overlook a variety of important legal considerations. This article broadly discusses these concepts and can serve as a roadmap for implementing appropriate resolutions for the new year. Below is a list of proactive tasks that every business should consider.
Annual Meeting, Registration, and Corporate Minutes.
A key principle in maintaining your corporate shield is following corporate formalities. At a minimum, your entity should conduct an annual meeting, draft annual corporate minutes, and file an annual registration, if applicable, in the state of your formation. If you are uncomfortable with these procedures, you should consider our law firm’s annual corporate update service to fulfill these requirements for your business.
Corporate Tax Returns and Income Statements.
As appropriate, your entity should be working with your accountant to prepare financial statements, create tax returns, and the owners should be making quarterly tax payments. Your tax professional should be consulting with you prior to year-end to plan for and implement any strategies to reduce and/or plan for tax liabilities.
Corporate Document Updates.
Do your articles, bylaws, operating agreements, and buy-sell agreements need to be updated? Have you added or deleted members or shareholders? We recommend keeping your corporate documents current and ensuring that your member or shareholder records are up to date. If changes are necessary, they should be implemented without delay.
Business Contract Updates: Client/Vendor Contracts.
Do your customer or vendor agreements need to be updated? Have your business terms changed? Have new laws or regulations impacted your agreements? In some industries, laws and regulations change regularly and often require changes to customer or vendor contracts. You should consult with your legal counsel to make sure that your contracts are up to date and implement any necessary changes prior to potential disputes or legal problems. Eliminate outdated or vague provisions in your agreements so that they are legally enforceable. Consider adding clauses that allow for the collection of interest and legal fees in the event of non-payment and subsequent enforcement.
Employment Law and Policy Changes/Employee Handbook.
Do your employment policies need to be updated due to changes in employment laws or regulations? Labor and employment laws are constantly changing, and it is wise to make sure that your policies and procedures remain consistent with applicable law. If you have independent contractors, are they appropriately classified and documented? Are they truly independent contractors? Updated handbooks, policies, and procedures will help you remain legally compliant and protect your business. Do you have clear and understandable remote work policies, if applicable?
Intellectual Property, Brands, Logos, and Ideas.
Have you protected your valuable ideas, inventions, brand names, logos, and other intellectual property? Many businesses have developed unique and valued intangible assets. These should be legally protected by obtaining trademarks, copyrights, and patents. Are your trademarks, copyrights, and patents current, and/or have they been renewed? Have you monitored your market or business niche for potential infringement and taken prompt action to protect your intellectual property?
Business Insurance Coverages.
Do you have adequate insurance coverages for potential general, cyber, and professional liability claims? If you have employees, do you have employment practices liability insurance? Do you have errors and omissions or malpractice coverage, if necessary? Has your attorney reviewed the coverages and exclusions to ensure adequate coverage? Do your coverage limits match any contractual requirements for projects that you may be working on? Do you have or need key-person insurance coverage?
Business Succession Plans and Partnership/Shareholder Agreements.
Do you have contingency plans in place for your ownership group? What happens if a shareholder/member/partner dies or becomes disabled? How will leadership succession changes be handled? Are your buy-sell agreements up to date? Do you have restrictions against members or shareholders attempting to sell their interests to third parties? What about potential transfers to spouses?
If your business lawyer has not been discussing these topics with you regularly, it could be time to upgrade your legal team. To use an aquatic metaphor:
We can help you successfully navigate these potentially troubled waters in order to put you in an optimal position to succeed without drowning in legal issues and problems.
If you need assistance with any of the issues discussed above, do not hesitate to contact me for a discussion of your needs.
David G. Hellmuth is a founding member of the law firm, Hellmuth & Johnson, PLLC, and works with small, medium, and large businesses on their legal needs and issues. For the past twenty (20) consecutive years (2005 to 2025), Hellmuth has been recognized as a “Super Lawyer”, by Minnesota Law & Politics Magazine, Twin Cities Business Monthly, and Minneapolis/St. Paul Magazine, an honor recognizing only the top 5% of attorneys in Minnesota. He has also been named as a Best Lawyer by www.bestlawyers.co for the past several years. David can be reached by e-mail at dhellmuth@hjlawfirm.com; or through the website, www.hjlawfirm.com.
