What is a legal checkup?
A legal checkup sounds a lot like what it is a review of your business's legal documents and contracts, licenses, insurance, and other compliance-related requirements. A legal checkup can be just as important as a regular checkup for your finances, car, or home maintenance. Like with these types of checkups, not paying attention to your business's practices can be just as harmful as ignoring a plumbing leak or a rattle in your car.
When doing a legal checkup for your business, you might look at your legal documents and review your operations. You might start by making sure everything is up to date, then address anything that got overlooked or slipped off your to-do list in the last year. Often, confirming legal compliance, or making sure your business is following the law, may require asking a lawyer for help.
What key items should I review for a legal checkup?
Each business is different. For example, if your company is a limited liability company (LLC), you likely have different legal requirements than a sole proprietorship, partnership, or corporation. However, certain issues apply across the board no matter how you structure your business.
Here are some issues to review when performing a legal checkup:
- When to renew business licenses, insurance policies, and any other legally required permits.
- When to renew your business's state registration, including required annual reports.
- Review your LLC Agreement or Partnership Agreement.
- Confirm the availability of your tax professional, then update your calendar for when to file and pay taxes.
- Figure out whether your business structure still fits your growth and goals. For example, perhaps you are a sole proprietor who needs to form a corporation based on your business's growth.
- Identify any intellectual property (IP) that needs protection. This could be new logos, branding, designs, products, website pages, and more.
- Review and update your vendor or third-party supplier agreements.
- Review, update, or renew your Lease Agreement.
- Review and update marketing or advertising campaigns.
- Review your staffing needs.
Besides reviewing the documents and processes you currently have in place, you can also take this time to do some planning. Do you want to reach a new market? Do you plan to grow? Do you want to offer a new product?
Planning your strategy gives you the chance to set up legal best practices from the start. Preparing at the outset is always better than trying to catch up and fix issues that you missed.
How do I make sure my business is compliant and stays that way?
As you strive to grow your business, it is smart to stay on top of legal compliance. It often takes less time and money to make sure you are running your business legally ahead of time than to go back and fix legal issues and pay penalties. After all, no one wants special attention from the Internal Revenue Service or Department of Labor, and no one wants to rack up state or federal fines and penalties.
The following can help make sure your business is legal now and in the future:
- Check your state's filing requirements. Make sure you have filed all the documents listed in your state's requirements, such as your annual report or any other required documents. You might need to update your information if you make any changes to your business, such as moving office locations. Many states will allow you to request a Certificate of Good Standing to confirm your business has met its ongoing state filing requirements.
- Pay your state taxes and license fees. Keep up with your state’s taxes, such as your franchise and excise taxes, and any business license or permit fees. You might also need to check with your local city and county about required fees. In some states, you do not have to pay business license fees at the state level, but you do at the local level.
- Stay updated on federal filing requirements. For example, if you have more than 50 full-time employees, you may need to provide information about the Affordable Care Act. If you have employees onsite, you might have to display workplace posters and meet other requirements.
- Keep organized written records. One key to compliance is to keep written records of your business's actions, processes, and procedures. If anyone needs proof that you are following the law, it will be easier to prove it. Also, if you plan to sell your business one day, keeping written records can help speed up the process and improve a buyer's confidence.
- Adapt to constantly changing laws. Legal requirements tend to change, sometimes quite often. Staying on top of these constant changes is part of compliance.
Who can I talk to about a legal checkup?
If you want to stay on top of compliance issues as you enter the new year, it is a good idea to schedule a legal checkup with a lawyer. It may also help to check in with your managers or key staff members beforehand to gather some information on your own. If you need help getting started, or want to learn more about keeping your business compliant, reach out to a Rocket Lawyer network attorney. If you're tired of going it alone with your taxes, use Rocket Tax™ to secure a tax pro. Just hand off your documents, RocketSign® and you're done!
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.