We’re past the holidays and catch-up chaos. It’s time to focus on new projects. These are the top five legal issues that your business should be focusing on in the new year. By addressing these issues, you will avoid over paying on taxes, reduce business uncertainty, and unlock value.
1. Make an S Corporation Election & Pay Less Tax
Making an S Corporation election is easy. You can do it yourself or with the help of a lawyer or accountant. It is for most people, but not everyone. Read this information on how and when to make the S election. If it makes sense for you, go ahead and make the election. Save a lot of money in taxes. But be sure to act fast. The deadline to file is March 15th.
2. Hold an Annual Meeting & Take Minutes
If your business is organized as a corporation, you need to hold at least one shareholder meeting each year. If your business is organized as a limited liability company or partnership, you don’t have to hold an annual meeting, but it’s a good idea. The annual meeting can be held in person, or by phone, email, or entirely in writing if your bylaws or operating agreement permit. Creating a trail of meeting minutes showing the election of directors or managers and approval of major company decisions will reduce the odds that a judge will let company a creditor “pierce the corporate veil.” And it will help your company appear more competent, credible, and attractive to banks and investors.
3. Clean up Your Contracts—or Write Them
Weak or non-existent contracts are a major source of uncertainty, risk, and stress. Courts resolve disputes first and foremost by looking for contractual coverage. Eliminate uncertainty and risk by committing important ongoing relationships to writing, and cleaning up your cobbled-together contracts—you know, the ones you found on the internet. You’ll get a lot out of basic payment, delivery, and scope terms, a method for resolving disputes, and a warranty or disclaimer.
4. Protect your Intellectual Property
Your business is built on its intellectual property. Your brand name identifies you in the marketplace. Your creative output provides unique value. Inventions and designs are the core of many businesses. Your methods, processes, and techniques give you a competitive edge. Isn’t it about time that you protected your trademarks, copyrights, patents, and trade secrets from competitors? Not only will carefully planned registrations and contracts protect your IP from infringement, they will increase the value of your business, and may even unlock new streams of licensing revenue.
5. Start Talking with Potential Investors
If your company is in growth mode, and in need of outside capital, there has never been a better time to raise money. Investors have record amounts of dry powder on hand. And angels are more accessible than ever. But before you get started selling, take some time to plan your offering. Figure out exactly what you need. Prepare offering documents. And make absolutely sure that you are in compliance with federal and state securities laws before you make a single sale. Otherwise a great opportunity could turn into a costly headache.