To make sure your company is heading into the new year with minimal legal headaches, it’s time for an annual checkup with your business lawyer. If you hate lawsuits and government investigations, here are five things you should cover during your consultation.
1. Changes in Business Ownership.
It’s important to verify who owns equity in your company and decide if changes in ownership need to be made for tax or other purposes.
Frequently, a key player joins or leave a business but the legal paperwork gets overlooked to reflect changes in ownership. In addition, the marriage or divorce of an equity owner may result changes in ownership.
As time passes, it may also make sense to plan to transfer some or all of your equity to your children as they assume responsibilities at your company.
These are just a few scenarios. The important thing is to recognize that ownership frequently changes hands in a company and you want to do it correctly to ensure that the business is protected and taxes are minimized.
2. Entity Status.
If you’re operating your business as a sole proprietorship or a general partnership, it’s probably time to discuss with your business lawyer the advantages of converting your company into either a corporation or a limited liability company.
Your legal counsel can explain the pros and cons of each type of legal entity so that you can make an informed decision as to the best path for protecting yourself as the company grows during the coming year and beyond.
3. Existing Contracts.
Have your business lawyer review your existing contracts to ensure you’re protected and to spot potential legal dangers that can be prevented by taking action now rather than procrastinating.
Sometimes this may mean amending an existing agreement, replacing it with a new agreement that better reflects the deal between the parties, or simply taking certain steps (e.g. giving required advance written notice) to extend or terminate a contract.
And after COVID-19 hit, chances are you’ll want your business attorney to review your agreements to see if they have “force majeure” clauses that protect your rights if there’s an epidemic or pandemic.
4. New Agreements.
During your consultation with your business attorney, be sure to discuss new relationships with employees, independent contractors, suppliers, and joint venture partners.
It’s likely you’ll have a few of those relationships that you’ll need to paper over with legal agreements to ensure that you’re adequately protected in case things go wrong, to reduce the risk of misunderstandings with the other parties, and to avoid lawsuits in general.
In addition, if you’re meeting face-to-face with customers, you’ll want to consider getting a COVID-19 liability release. This is true even if you already have a pre-COVID Waiver, Release of Liability & Assumption of Risk agreement signed by your customers.
5. Website Legal Compliance Review.
Because the laws and regulations governing ecommerce are constantly changing, make sure your attorney reviews your website for compliance issues. According to Internet Business Lawyer Mike Young, it may just involve a simple update to your site’s privacy policy and other legal docs.
Occasionally, you may also need to tweak some of the language on your site to avoid getting in trouble with the U.S. Federal Trade Commission (FTC) or other government regulatory agency.
Note that this list of five issues is not all-inclusive. However, it does cover the most common legal problems that you’ll want to get fixed during an annual checkup with your business lawyer.
