As a business owner, you are likely always on the lookout for ways that you can save money and minimize risk. A great way to do both of these things is to anticipate legal problems and mitigate them before they become a big deal.
From time to time, ask your lawyer to perform a review of the legal side of your business. This type of legal audit can help to uncover omissions and potential hurdles that could become troublesome in the future. Even just the absence of corporate meeting minutes could lead to important notes or information being missing when needed.
A legal audit of your business can help to list and call attention to changes necessary in documents or contracts affected by new laws and regulations that have been enacted. The process helps to provide business owners with the opportunity to discuss potential issues and how best to deal with them. Problems with missing or incorrect information can be quelled at an early stage rather than later – complications can be resolved efficiently and cost-effectively when caught in time.
Some companies do an internal legal audit a month or so before the end of their fiscal or taxable year. This enables the audit process to include year-end tax planning issues. Business owners can often save substantially on taxes by either completing a transaction within the current tax year or by deferring the transaction until the next taxable year. Many businesses have the audit completed prior to their annual meeting and use the audit findings as a planning vehicle for actions that require majority approval at the annual meeting.
There are records and documents that are reviewed during a legal audit such as:
- Basic constituent documents – such as the articles of incorporation, bylaws, stock transfer records of a corporation, the articles of organization and operating agreement of a limited liability company, or the partnership agreement of a partnership. Reviewing these periodically can disclose issues that need to be addressed because of changing circumstances or laws. It might even be advisable to change from one kind of business (such as a partnership) to another (such as a corporation).
- Employment Agreements
- All leases, licensing agreements, and other contracts with third parties – placing special attention to termination dates, renewal options, and other flexible clauses
- Insurance policies – life, business, equipment, property, liability, fiduciary, and so on
- Standardized contract forms used by the company such as purchase order forms, warranties, brochures, privacy policies, shipping and returns policies
- Internal policies such as procedural manuals, employee handbooks, safety data sheets, antitrust compliance handbooks
- Official copies of board member, management, and staff meeting minutes
- Regulatory compliance documentation such as trade name filings, environmental regulations, Employee Retirement Income Security Act (ERISA) problems, Securities and Exchange Commission (SEC) requirements
- Structural changes within the business organization – conversion to a new form of business, implementation of a new retirement plan, updated or replaced fringe benefits plans
- Filings of annual reports with the Secretary of State and other regulatory bodies
- Tax planning issues concerning S Corporation status or alternative minimum tax reviews
- Filings and records of tax returns, license renewals, financial operating reports
- Any pending or potential litigation involving the company
- Recent legal developments affecting the business or the industry as a whole
For many years our law firm has developed lasting relationships with business owners who have come to us for assistance. They value what we offer as outside counsel and we strive to provide them the benefits of in-house counsel without the cost of maintaining their own legal department.
Protecting a client’s confidential and proprietary information, trade secrets, and professional associations from interference, and violations of non-compete agreements, fraud, theft, and other legal misconduct is important. Human resources professionals and managers of businesses can seek advice regarding workplace law and what is required to remain in compliance with statutes, employment laws, employee handbooks, work contracts, confidentiality agreements, and other related business legal documentation.
At The Floyd Law Firm PC, we are committed to helping large and small business owners. We work as a team when solving problems in business situations and we understand how to protect our client’s interests. With more than 100 years of combined experience, our firm brings professionalism and advocacy with a focus on fostering long solid relationships with all of our business clients.