It’s that time of the year again when businesses find themselves immersed in paperwork, calculations and holiday parties.
With so much going on for them, businesses tend to leave out the legal work for next year. Legal experts say that’s not the wisest thing to do.
According to Charley Moore, attorney, founder and CEO of Rocket Lawyer, planning before the year end can help ensure small businesses “have a happy, healthy and legally sound New Year.”
To make lives easier, Moore offers the following legal tips to help small and medium-sized business owners.
4 End of Year Legal Tips for Small Businesses
Don’t Wait to Incorporate
For businesses that want to grow in the new year, incorporating is an important step. Moore calls it “the first step” to limit liability that shields personal assets from business failure.
It can also offer tax advantages such as the ability to deduct fringe benefits like travel expenses.
Incorporating your business provides you with a sound corporate foundation to grow and mitigate risks of failure.
Get It In Writing
According to Rocket Lawyer’s small business index, the biggest legal issues facing small businesses are contract negotiations (24 percent) and failing to collect payments (18 percent). Getting everything in writing can help you avoid these legal hassles.
Moore advises, “Whether it’s a new employee or a repeat client, never assume anything is binding unless it’s in a contract.”
A legal contract works for both parties and establishes accountability. That’s good for you and your client or employee.
Refresh or Create Your Business Will
A Buy-Sell Agreement, also known as a Business Will, is a document that helps businesses prepare for future. If you are in a partnership, this document details what happens should one party leave the business.
If you already have a Buy-Sell Agreement or an estate plan, make sure you review it annually. This is especially important if you have changes in life circumstances such as marriage, divorce, birth of a child, among other reasons.
An updated Buy-Sell Agreement or estate plan will protect your interests and make it easier for your successor to assume responsibility.
Keep Good Counsel
As the new administration takes office in the new year, complying with government regulations should be on top of your priority list. You should “consult a business attorney more than once a year rather than wait until a big issue arises,” suggests Moore.
He adds, “It’s better to pay a little up front than a lot down the road, especially when dealing with federal regulations.”
Gavel Photo via Shutterstock