With 2014 rapidly coming to a close, businesses everywhere are starting to prepare their finances, contracts and legal documents for year-end reporting and renewals. Business News Daily spoke with three legal experts to find out what questions every small business owner should consider discussing with a lawyer prior to the end of the year.
Is there anything that needs to be updated or addressed in any of my business's contracts and legal agreements?
Most businesses have contracts with third-party vendors that need to be renewed on an annual or semi-annual basis. Ask your lawyer to look through any contracts that end with the calendar year, to confirm their accuracy before renewal.
"Now is an excellent time to look through [standard contract] provisions to make sure all representations and warranties remain accurate about the product or service, and are written concisely and clearly," said Karen Tidwall, a shareholder at law firm Whyte Hirschboeck Dudek and a member of the Business Litigation Practice Group and the Women's Initiative Practice Group of ALFA International.
Richard Dellinger, partner, commercial litigation attorney and deputy practice group leader at Lowndes, Drosdick, Doster, Kantor & Reed P.A., agreed, noting that the end of the year is a good time to review any shareholder or operating agreements, to ensure that they still adequately cover your business's needs.
"For businesses run by a board of directors, the bylaws should be reviewed, to determine if they are up-to-date," Dellinger told Business News Daily. "Small business owners also need to ensure that their employment agreements are up-to-date and that they contain adequate company protections [such as] confidentiality, nonsolicitation, noncompetition, etc."
Have I maximized my tax deductions?
While individual taxpayers may not start thinking about their taxes until much closer to April 15, business owners have earlier tax deadlines to meet, and need to begin preparing now. As the year closes, you should go over your tax deductions, to make sure you've taken advantage of each one that applies to your business.
"Whether it be charitable contributions, startup expenses, vehicle expenses, new equipment purchases or other major purchases, those deductions could be used to offset tax liability," Dellinger said. "Small business owners need to know their limits and plan their expenditures, to maximize the deductions."
Basha Rubin, founder of curated small business attorney network Priori Legal, added that if your business's fiscal year matches the calendar year, you may want to strategically plan business expenses for either before or after Dec. 31, depending on which tax year would be more advantageous for your business.
Will the Revised Uniform LLC Act affect my business?
If you're one of the many small business owners who have structured their company as a limited liability corporation (LLC), you may want to ask your attorney about the Revised Uniform LLC Act, which has recently been updated in a number of states.
"The major changes in the LLC Act may include the elimination of Managing Members, modification of fiduciary duties, changes in default voting provisions, changes to withdrawal rights and revisions to statements of authority," Dellinger said. "If your small business is an LLC, you should speak to your attorney about the implications of the Revised Uniform LLC Act."
Is my business's intellectual property protected?
You may not have given much thought to trademarking your business name or other intellectual property (IP) your company may have produced, either because you don't have the time or resources to go through the trademark process, or because you're not sure if your IP is patentable. An IP audit with your lawyer can help you figure out what's eligible to be trademarked — and potentially save you a lot of legal fees in the future.
"A lot of small business owners don't file for a trademark," Rubin said. "It's a huge cost down the road if you don't have the right to use [your business name]. [In] an IP audit ... a lawyer will walk through your portfolio and show you how to best protect it. It's both a shield and a weapon."
Should I make any changes to my employee policies or benefits programs?
One of a business's most critical assets is its employees. It's important to review your policies and benefits, to make sure you're best serving your staff's needs — as well as your own — in the coming year. A lawyer can help you figure out the best language to use and the best policies to put in place to help protect you and your employees, from a legal standpoint.
"Businesses [tend not to] deal with the employee side of things until an issue comes up," Rubin said. "All small businesses should put together an employee handbook. Think about your policies, and be really clear about them, to avoid legal issues down the road."
Tidwall also noted that with the recent sweep of same-sex-marriage legalization in states across the U.S., you'll want to ask your lawyer if and how the rulings affect your benefits program, and update them if necessary.
Have my insurance needs changed in the last year?
As your business grows and evolves, it's likely that your insurance needs will change, too. Use the year-end wrap-up period to re-evaluate what coverage your business requires, and determine whether your current plan is sufficient.
"If you had an insurance policy five years ago that covered you for a certain liability amount but your business has grown, you'll want to get [more] coverage," Tidwall said. "Take a look at your contracts, and make sure you're protected to the [fullest] extent possible."
Rubin noted that, although these issues are important to discuss as 2014 comes to a close, this shouldn't be the only time you've spoken to your business attorney all year. She advised small business owners to think of their lawyer as an ongoing adviser, rather than a process manager who you contact only when you have a legal problem to solve.
"We encourage business owners to check in with their lawyer once a month and talk briefly about what's going on [in their business] and see if the lawyer can help them strategize," Rubin said. "Instead of being a call center in crises, [your lawyer] becomes a strategic advantage [and] a resource."