Legal Checkup for the New Year -- 6 Questions Every Business Owner Should Review

The start of a new year is always a good time to step back and look at what you are doing with your business.  What is going right?  What could be improved upon?  What changes, if any, do you think should be made in the upcoming year.   From a legal perspective, you should consider the following checklist of important areas to review. 

1                    Is your business organized and operated to protect your personal assets?  Are you incorporated?  Do you need to be?  If you are incorporated are you operating your business as a corporation?  Do you carry enough insurance?

2                    Is there more than one owner of your business?  If yes, do you know what would happen if your co-owner died or decided he or she wanted to leave the business?  What do you have in place to deal with this type of transition? 

3                    Do you have your customers sign contracts or fee agreements?  If no – why not?  If yes – have you reviewed the terms of those documents in the past 3 years to see if they need to be changed?  

4                    How much exposure does your business have if a large customer goes bankrupt?  What are your receivables like?  Have you tried to obtain security for money you are owed?  If you loaned money, did you have the borrower sign a note? 

5                    Are the people who are working for you properly classified as independent contractors or employees?  If you treat an individual as an independent contractor and the Commonwealth determines they are an employee the financial exposure to your business is significant.    

6                    Do your employees sign non-compete and confidentiality agreements?  Do you have concerns that employees will take your customers or use your confidential information.  If yes, what steps are you doing to protect your business and your rights. 

If you have concerns after reviewing the above checklist  you should talk to a lawyer about what can be done to put your business in the strongest position.  Sometimes, the most expensive decision you make is deciding you can’t afford to speak with an attorney.

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