Attorneys are often contacted by a client after a problem arises and are asked to help resolve it. While we are happy to do so, experience has shown that having good strategies and documents in place ahead of time often prevents the problem from arising in the first place. Following is a list of some actions you should consider if you want to avoid some unpleasant situations.
1. Have an Employee Handbook.
There are labor and employment laws that effectively require many company policies (such as those relating to discrimination and leave) to be in writing and provide for penalties if they are not. Are you in compliance with those requirements?
2. Keep Your Corporate Records Up to Date.
Many of our business clients operate as corporations. In order to take advantage of the benefits of being a corporation, it is necessary to keep the minute book and stock records up to date. Are yours current?
3. Have a Succession Plan in Place.
Who will own and operate the company when you are gone? If there is currently more than one owner, do you have a buy/ sell agreement in place to cover the death, retirement, or incapacity of each other? If not, you may end up in business with family members of your former partner who may have far different goals than you, or your family members may end up owning part or all of a business that they are ill-equipped to run or sell.
4. Have Your Purchase and Sale Forms Up to Date.
The small print on the back of standard purchase and sale orders is often generic and might even be detrimental to you in the event of a dispute. A customized version of those forms could protect you by providing that disputes are resolved in a manner and location of your choosing.
5. Have Appropriate Insurance Coverage.
We have seen many situations where a business requests coverage for certain types of events or conduct, obtains a policy, and then when a claim is filed, discovers that the coverage is far different than what was requested. Our attorneys can perform an insurance audit to make sure you have the coverages you need.
6. Comply with Privacy Requirements.
If your business collects and stores personal information of customers – names, addresses, social security numbers, credit card information, etc. – then it likely is required to comply with state and federal privacy law. Information privacy and security is as important today as it has ever been, so it is critical that your business have the appropriate controls, policies, and procedures in place to keep your customers’ information secure and to comply with the law.
7. Have Good Hiring Practices.
Know what questions you can ask and when in the hiring process you can ask them. Don’t make the mistake of hiring someone as an independent contractor if they are really an employee – governmental units are actively looking for misclassified employees to obtain back taxes and penalties.
8. Protect Your Intellectual Property.
Have you invested time and money in developing your business’ brand and in developing original ideas, procedures, methods, and other materials that give your business a competitive advantage in the marketplace? Then there is a good chance that your business owns valuable intellectual property. Taking the appropriate steps to protect this intellectual property, including obtaining federal registrations for your trademarks and copyrights, will reduce the risk that competitors seek to unlawfully use your intellectual property and will allow appropriate remedies to you in the event that they do.
9. Protect Your Business’ Trade Secrets and Confidential Information.
More than 50% of the value of American businesses is tied up in their intellectual property, including confidential information and trade secrets like customer lists and business processes. Your information security is only as good as your agreements and processes.
10. Protect Your Personal Assets from Business Claims.
Although it might be unavoidable to have some personal assets at risk in connection with your business (for example, if you are required to personally guaranty a bank loan) there are steps you can and should take to protect and segregate your personal assets in case the business runs into financial problems.
At HolmstromKennedy, we are ready to help you regarding these matters and just about any other type of legal work your business needs.
Mike Schappert is a member of the firm and Chair of the Trusts & Estates Group. Mike handles advanced estate planning and estate and trust administration for the firm’s clients, focusing on the needs of high net worth clients, executives and family business owners.