END OF YEAR LEGAL CHECKLIST FOR ALL BUSINESSES
The year is quickly coming to an end and as a small business owner, you’re probably already thinking about the new year and all of the exciting projects you have lined up. But before you get in too deep with future plans, be sure that your business is currently in good standing before the year ends. Here are some important steps to complete on your end of year legal checklist:
If you’re a corporation, it’s important that you hold an annual meeting before the year ends, if you have not done so already. This is where you make important decisions for the year and make sure the shareholders and board members are all on the same page. An important part of holding annual meetings is recordkeeping through corporate minutes. These minutes summarize what’s been decided and what’s been discussed at these meetings. Each state has its own code sections for your business to comply with so make sure you are listing the right code section in your corporate minutes. At this meeting, you’ll also reappoint the directors and the directors reappoint the officer. To stay compliant with corporate law, it’s important that you treat your corporation separately from yourself and holding annual minutes is one way of complying with the law.
STATEMENT OF INFORMATION:
A Statement of Information is usually required from all business entities in most states. The Statement of Information is filed with your state’s Secretary of State and contains updates on important information about your business, including the names of your directors, members, and registered agent. If your state requires you to file a Statement of Information, there is usually a specific due date (usually the anniversary of your business’s incorporate date). If you miss this filing, you can be subject to penalties and late fees.
With the global pandemic we all have experienced, no doubt your business has been affected too where you may have undergone a number of internal changes, such as co-owners leaving, retiring or simply took a reduced salary. Your company’s governing documents should be updated to accurately memorialize any changes in ownership, including any new or revised agreements between owners.
The end of the year is an ideal time to review all of the company’s outstanding contracts and current relationship with vendors. All outstanding contracts should be reviewed to determine whether their stated term expires in the upcoming calendar year, so you can determine whether or not to seek a renewal or look for another vendor. This is also a perfect time to renegotiate some terms to be more favorable for your company.
As your business operations grow and otherwise change from year to year, it is likely that your company’s insurance needs will likewise evolve. You should take some time to reevaluate the coverage and to determine whether your current insurance polices are sufficient for your growth and expansion. In addition to the business insurance coverage, you should also look into getting some ‘key man’ insurance that will help the company financially if one of the owners or a ‘key person’ leaves or dies. With this insurance, your company could continue without any interruptions and will provide you time to fill that ‘key person’ role.
While the end of each calendar year is a busy time for everyone, especially business owners, taking some time to review your legal checklist will save you both time and money. We are always available to answer any questions that you may have and to assist you in conducting the annual legal review of your business.
Becoming a business owner, you control your own destiny, choose the people you work with, reap big rewards, challenge yourself, give back to the community, and you follow your passion.
Wishing you and yours a Merry Christmas, Happy Holidays, and a very Prosperous New Year!
For more information on how to legally start and grow your business please visit my website at www.BaglaLaw.com
Disclaimer: This information is made available by Bagla Law Firm, APC for educational purposes only as well as to give you general information and a general understanding of the law, and not to provide specific legal advice. This information should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.