20 May Does Your Business Need a Well Check-up… by Troy Judd

Sometimes, when we go to the Doctor’s office, it is because of an emergency or because we are sick, but it is best practice to also do a well check-up from time to time. This helps identify issues that are not current problems but could turn into problems if neglected. Just like a person, a business has health issues. Not all of these are legal issues, but many are. Most small businesses, those too small to have an in-house General Counsel, only seek legal counsel when there is an emergency or problem.

Just like a person will benefit from at least an annual well check-up with a Doctor, it is good practice to have at least a yearly review with an attorney that is more about the overall legal health of the business, rather than just focusing on one issue. Depending on the size and nature of the business, this may take an hour or two or a little longer. Just like going to the Doctor for a well check-up, the hope is that all is well, but identifying any issues that need further attention is the goal. As the old saying goes, an ounce of prevention is worth a pound of cure. Next, we will explore some issues that may be addressed in a legal well check-up.

CONTRACTS

Contracts are a business’s formal relationships with its customers, vendors, and often its employees. Every contract is a legal document that consists of rights, duties, obligations, and, of course, risks. Most businesses have dozens, hundreds, or even thousands of contracts. It is quite common for businesses to have poor records of their contracts. A legal check-up will provide a high-level overview of the business’s contracts, and processes and procedures for managing contracts.

LEGAL AND REGULATORY COMPLIANCE

There are hundreds of federal agencies and subagencies, with more at the state and local levels. It is challenging, if not impossible, for a business of any size to be aware of every law and regulation that impacts its business, much less be in 100% compliance. Large companies may have teams of individuals to deal with compliance, but most small businesses do their best to follow all the rules. A legal check-up may help to identify blind spots or areas where the business is out of compliance. This is an area where what you don’t know that you don’t know can bite you.

EMPLOYEES

While employment issues might easily fall within the areas of contracts or regulatory compliance, it is an area that can subject a company to greater risk, so it will always, unless the business does not have employees, be an area that is addressed in a legal check-up. From hiring to termination, there are laws and regulations that must be followed, and significant risks to the business. Keeping employment documentation, including employee handbooks, up to date and accurate, is also essential. A legal check-up can identify areas where employee risks can be reduced.

TAXES

There are numerous taxes, including payroll taxes, property taxes, as well as income taxes at federal and, sometimes, state and city levels. All of these are subject to complex laws and regulations, with specific rules as to the timing, method of payment, and submission of forms. There are frequent changes, so constant diligence is required to stay abreast of the laws and regulations. Failure to properly pay taxes results in risks to the business. On the other hand, every dollar that goes to taxes is a loss to the company. Of course, taxes paid should be minimized where possible. While a CPA or accountant certainly has a role here, a legal check-up may also identify areas that need attention.

PROPERTY

From real property to intellectual property such as trademarks, a business’s property is its lifeblood and should be protected. Often, this requires specific actions to provide legal protection. A legal check-up can review these types of issues and recommend further protective measures, if needed.

The attorneys at Kearney, McWilliams & Davis will be happy to schedule a legal check-up to help ensure the continued good health of your business.

By Troy Judd, Senior Attorney at KMD Law