An annual business checkup by an experienced business attorney can help you keep your business healthy. When a business first opens, the owners focus on what all needs to be done just to open the doors. Without any actual history, many items regarding the initial decisions are more best-guess than fact. Every new business has multiple variables to contend with before opening, a steep learning curve doesn’t stop for some time. Owners have to deal with everything from technology to the new welcome mat curled into a tripping hazard. Any number of variables can have a huge effect on ordering stock, customer seating, to number of employees needed. As time passes and experience is gained, owners get well versed in making adjustments and changes as they go. They know when to staff up, what to repurpose, and finally having the right number of people in tech support. Given the number of daily adjustments and day-to-day tasks new owners are faced with, some business wellness items may slip. But skipping over some of the basics of business wellness can create serious problems over time, sometimes with disastrous results. During your annual physical, your doctor performs some basic tests all of which are designed to illuminate potential physical issues. Likewise, an experienced business attorney can perform a business checkup to help ensure your business wellness.
At least once a year, set some time aside to take a fresh look at your business basics. Even businesses that have been an on-going concern for some time can benefit from a business checkup. A frequent issue revolves around personnel changes. Sometimes, it’s only after a person leaves the company is it fully known what all they handled for the company. And, all too often, that void isn’t noticed for a period of time, finally illuminated only by an urgent need. When the need is greatest is not the time to discover nobody’s looked after it for years on end.
Marketing
Nobody wants what isn’t valuable. But now that you’ve rolled out the Next Great Thing, everyone knows it’s there and that it has value. Periodic Internet searches of your business name, and maybe your lead product, can be quite revealing. Once something has value, others may attempt to take it. A primary business checkup is to regularly check for phonic renditions of both your business name and your domain. With a quick change to a character or two, a competitor could siphon off customers who are trying to reach you. When you registered your domain, did you also take the other available extensions? Did you trademark your business name or slogan at the federal or state level? If you didn’t do any of these, you should note why you didn’t do them into your Company Book. It’s important to have some decisions, and their rationale, documented for future users. The dates of your periodic checks on your property should be also be noted in your Company Book. What you do to protect your business name, and how often you do it, could save you a lot of money.
Secretary of State
At least annually, if not more, when you file your Periodic Report, spend a few minutes looking at other filings. Here again, is anyone attempting to capitalize on all the time, money and effort you’ve put into building your business? Remember to check for phonetic filings that may cause confusion in the marketplace, whether they were designed to or not. An experienced business attorney can provide a business checkup and review your past filings. Areas that are not currently compliant with state requirements can be identified and fixed. A recent example: if you hire a Registered Agent for your company, you shouldn’t change their address to your own.
It’s surprising how many different people and companies use those open, public records for their own purposes. Some are for legitimate business purposes, such as lenders, potential business partners, customers, and in some cases, competitors. But an increasing number of users are accessing legally required business filings to try to harm the owners. It’s important to have an experienced business attorney look at your filings and see if improvements can be made.
Website Disclaimers
If your business has an online presence, you should have an attorney check your website disclaimers periodically. It’s important to look at your site from both sides, your business needs and your customer’s needs. Looking your needs, your business checkup should always include ensuring your website has all the disclaimers and protections that apply. For example, you might be missing out on valuable protections if your website disclaimer language is out of date. Legal disclaimers can and do become out of date simply by the passage of time. And, depending on the type of business you operate, you may now need more than one disclaimer for your website.
A customer looking at your website is going to be looking for their safety in they work with you. With the proliferation of privacy rights, touching almost every continent, what your site says, and how it works, is paramount. In addition, there are global changes from time to time, that should also be taken into account. Different countries can have very different ideas as to you and your customer’s “rights” to their own information. Also, other countries can be flagged by the United States government as not quite so safe to do business with. Where the company that you contracted with is, and where your customer’s data is, can be very different things. What your website does with information it collects, and where it stores it, can have very serious consequences.
Financial Business Checkup
Any business checkup should include at least two different financial areas: money in and money out. The primary ‘money in’ area to keep a close eye on is accounts receivable. If your customers are not paying their accounts on time, or in full, it might be time to make some changes. Are your customers paying in strict accordance with the terms they originally agreed to in the contract? Is a long-term customer slowly slipping in their pay rates without a word as to why that is? Every business is dependent upon money coming in to be able to send money back out again, for rent, expenses, etc. If you are experiencing problems in getting paid, it could be a sign of something else going on. There are usually things you can do, changes you can make, to adjust things while maintaining good relationships with your customers. They’re your customers, they’re valuable to you, you worked hard to get them, so why not try to keep them? An experienced business attorney, who also worked as an accountant for several years, may be able to help. Checking into the language of the underlying contract and the language present on the invoices themselves is a good first step. There are often advantages to be had by taking a review of supplier arrangements, costs, and payment terms. To them, you’re the customer, you’re valuable, and yes, they probably want to keep you, too.
Another primary business checkup item under ‘money out’, and this one you can do yourself, is your bank. It’s always surprising how much this item is overlooked, but banks know that and some actually count on it. Whenever someone is counting on your continued patronage, that’s the one to look at first. A good item to look at is whether or not you can consolidate your accounts to net lower overall costs. Or, your bank might have a beneficial promotion running that could help your business or lower your costs. When you’re done checking “in” with your bank, check “on” your bank. Map out when your banking fees, including credit card processing fees, changed. This will give you an idea of about when they might change again and before that happens, get some quotes. Check with your bank’s competitors and find any offers they might have to win your account and save you money.
Corporate Compliance
Just because it uses the word “corporate” in the term, don’t think the concept doesn’t apply to your limited liability company. The term “corporate compliance” applies to corporations, limited liability companies, and almost every other form of business entity in Colorado. Corporate compliance is an important tool to keep current in the event trouble finds your door. This is an important business checkup item because it can keep bad situations from being very bad, very quickly. And yet, fair few companies have theirs as current or complete as it should be to provide those protections. A lot of hours can be spent attempting to bring records current, but inevitably, things can be lost or forgotten. Rather than lose important items to the ages of time, best practice is to just keep it current.
The Colorado rules for corporate compliance can be found over a number of alternate state statutes. Plus, there are important lessons to be had from past court holdings, often excellent examples of what “not” to do. There isn’t a handy list available, or published by the state, that business owners can check off as they go. And, not every single thing applies to every single company in business, which is why this post doesn’t contain one, either. But an attorney, familiar with your business, can create a business checkup list to guide you throughout the year. This way, as different items or issues arise, just consult your bespoke business checkup list. If in doubt, put a copy in the Company Book to wait for the next annual review by your attorney. While underinclusive may work against you, there is no penalty for overinclusive, and items can always be removed later. Some issues may need to be documented, some copies may need to be made, and some rationale included, if needed. Colorado allows for electronic records, so no trees need to be harmed for corporate compliance, a click/copy/paste will do.
Avoid Piercing
Under Colorado law, a company is a separate “person” from the owner and must be treated as such. You can document major decisions you make for this “person” in the form of Company Minutes. Many people include research done, or just a reference thereto, for major projects such as building a new facility. Items that show the operators of the business treated the business as wholly separate from themselves, are typically helpful. Far too many business owners treat their businesses as an extension of themselves, leaving them ripe for “piercing the corporate veil”. This is one of the biggest mistakes a business owner can make as it can expose the owner’s personal assets. Fortunately, it’s fairly straight forward to avoid such a disastrous outcome.
Business Checkup – Self Help
While there is no one-list-fits-all list for any business checkup, there are items listed herein you can use to get you started. Building good corporate compliance practices and business checkup items into your regular routine can be quite painless. Staying compliant with the state, such as timely filing of your Periodic Report, is pretty easy. Colorado even sends you reminders so you don’t forget. You can run the company name through search engines looking for interlopers when you’re on hold. Just be sure to record where and what you checked, date it, and save it. Calendaring reminder dates of business care, such as having someone look over your website disclaimers, are easy, too. And, as always, if you don’t know how to do something, just ask.
Another business checkup item you can do yourself is to periodically check in with your insurance provider. Ensuring proper coverage is there when it is needed most is a great way to protect your assets and hard work. Your agent should be able to run you through a few questions of their own while they check your coverage. And, you’ll want to tell them what’s new and whether anything has changed since you bought the policies. See whether the assumptions you made, and insured, in startup mode still hold true a year or five later. The one constant is that everything changes, so make sure you’re fully insured for how you do business today. Share any changes you’ve made to improve your business, such as your new technology or your more robust backup systems. Some companies are now giving discounts for “going low”, reverting back to cords and other devices that can be disconnected. The theory is, if it’s disconnected, it can’t be hacked, so the risk is lower, as are your premiums. Even if you can’t disconnect, it doesn’t hurt to ask if there are discounts available if you restructure your storage. Ask them if there are any changes you could make that might lower your premium. Then you can make an informed business decision about whether or not to proceed.
Call For Help When Needed
Should you need help with these, or any other business matter, call experienced business attorney Susan Larsen at 303.520.6030.