As we approach the beginning of the New Year, it is important to start both tax and business planning for next year. Waiting until after the year begins is actually too late. Each year, I receive calls about tax planning for the year that is ending, and sometimes it is just too late, and the actions taken during the year, without proper planning, sometimes results in unwanted liability.
It is important for businesses to conduct a business check-up. Depending on the status of the business, it should take an attorney between one and 10 hours to complete the review (not including corrections to be made). This could save hundreds of thousands of dollars. This year, we have seen several individuals sued for not keeping the formalities of the corporation or the limited liability company in place.
I suggest is that all business operators, be it the president of a corporation or a sole proprietor, meet with an attorney and have a review of business operations, to determine if there are any legal issues which could come back to haunt the operator and impose liability on the owners and/or employees. This is no different than having a personal physical, to make sure a business is not sick and in need of attention. Be prepared to answer questions about what the business actually does, how it is being operated, who are the clients/customers, what contracts are used, the type of insurance in place, and if there are agreements that affect the ownership of the business. Also be prepared to go over and supply business organizational documents to assure protection.
During the meeting, a qualified attorney should review and discuss with you various areas of concern. A review should be conducted of the organizational and ongoing documents, including minutes, bylaws and operating agreements to make sure that they are up to date and include information to keep the “veil” in place. This review should include a review of the type of business format the business is operating under and of existing agreements relating to ownership. Include in the employee/employer relationships and a determination if a policy and procedure manual should be created or reviewed.
Do it now, waiting could cause exposure to liability.
