As the end of the year approaches, business owners should review their financial and legal obligations for 2015 and prepare for 2016 and beyond. While each business is unique, the following list should be a start.
Year-end Legal Checklist for Small Businesses
1. Review your lease. If your lease has a right to renew for an additional term, there is usually a period during which you must notify your landlord if you intend to exercise the right to renew.
Review your lease, so you’ll know when you must notify your landlord that you wish to renew. If you do not wish to renew you lease and it is set to expire in 2016, you may also have requirements for when you have to notify your landlord that you will not be extending the lease.
2. Review space requirements. Whether you work out of your house or have a separate physical location, determine if the space is meeting your needs. If you are currently in a lease and want to move, you may want to discuss early termination with your landlord. This should only be done after speaking with your attorney to ensure that it is appropriate for your situation.
In some cases, you may be able to terminate your lease early, especially if you are paying less than current market value and your landlord can easily rent the space for more or if you have a cash payment to pay in exchange for early termination.
3. Review vendor agreements. If vendor agreements are about to expire, consider renegotiating the terms of those agreements. Reviewing the agreements about a month before the expiration dates will give you time to request any changes. If you have been a long-term client with a good payment record, you may want to inquire about discounts for the new term. If you aren’t happy with the vendor, you may want to search out alternatives.
4. Review equipment leases. Review your equipment leases, such as copiers, fax machines, and furniture. Many equipment leases, especially copier and fax leases, auto renew and have strict deadlines to terminate the auto renewal. Although your equipment has aged, most equipment leases I have seen do not give any discounts for auto renewals of old equipment.
If you have any older machine, you will want to contact the vendor, and possibly other vendors, to see if you can get newer equipment for the same price.
5. Ensure any annual meeting obligations have been meet. If your business is organized as a corporation, you should be having annual meetings — for some companies it is a requirement. If you have not had an annual meeting of the members (for an limited liability corporation — LLC) or shareholders and directors (for a corporation), call one before the end of the year. Review your operating agreement or bylaws to ensure that you comply with all rules for calling meetings.
If you do not regularly schedule your annual meeting, this is a good time to start. Review your operating agreement or bylaws to see if there is any requirement for which month you should schedule it for that month. If no month is designated, speak to any other owners to determine the best month for the meeting.
6. Review your books and financial records. Ensure that all expenses have been accounted for in your books. If you have paid for anything in cash or on personal credit cards, make sure these expenses have been recorded. If you haven’t prepared a mileage log, now is a good time to review any travel so that you can write a check for mileage to any owners and employees that the company reimburses for mileage.
7. Review your compensation packages for employees. If you have employees, this is a good time to review their compensation packages. Holidays make a good time for bonuses and a pay raise may be a way to ward off the holiday blues — and resulting inefficiency at work. Also, check health insurance packages for both your employees and yourself, as open enrollment is typically during this time.
8. Schedule a meeting with your CPA, insurance agent, attorney, and banker. This is a good time to schedule a meeting with your professional advisors, to plan for next year. For instance, if you are preparing to take out a loan or move into a new space, everyone should know this so they can be preparing for the change. If you are planning on bringing on your first employee, you attorney may want to prepare paperwork in advance and your CPA and insurance agent can give you ideas regarding the costs.