The start of a new year is the perfect time for businesses to take stock, get organized, and ensure it is legally buttoned up for the months ahead. Here is a practical checklist to help your business enter the new year on a solid footing.
1. Review Your Governing Documents
Are your governing documents up-to-date and reflective of how your business currently operates? Have there been changes in ownership, roles, or voting rights that need to be memorialized?
As businesses grow and evolve, it’s common for key elements—such as ownership structure, voting rights, or transfer restrictions—to change over time. Failing to update governing documents, like operating agreements, bylaws, or shareholder agreements to account for developments can lead to confusion, disputes, vulnerabilities, and even litigation. Ensuring your documents are accurate, understood, and align with your current practices provides clarity and minimizes the risk of lengthy and expensive conflict.
If there have been changes in ownership, such as the addition of new members or the departure of existing ones, or shifts in roles and decision-making authority, it’s crucial to memorialize these changes.
2. Update Your Secretary of State Filings
Are your business registrations, including your assumed business name, current with the Secretary of State? Review the listed registered agent, registrant, principal address, and officers/members to ensure all information is accurate. File any annual reports or updates to avoid penalties or risk of administrative dissolution.
3. Document Your Corporate Minutes
Did your corporation hold annual meetings or significant decision-making sessions? Meeting minutes serve as an official record of decisions made, discussions held, and actions authorized during key corporate gatherings. Whether it’s electing new leadership, approving transactions, or finalizing property sales or acquisitions, these records provide clarity and accountability. Properly drafted minutes protect the corporation by demonstrating compliance with governance requirements.
4. Assess Insurance Policies
Are your business insurance policies sufficient to cover your current operations? As your business grows or evolves, your risks and coverage needs may change, making it essential to regularly review your policies. New assets, expanded operations, or emerging risks may require updated or additional coverage.
5. Revisit Business Succession Plans
Do you have a plan in place to address leadership transitions or unexpected departures? Reviewing and updating buy-sell agreements can provide clarity on how ownership interests will be handled in the event of a planned transition, sudden departure, or unforeseen circumstance.
Start the Year Off Strong
The new year brings an opportunity to tidy up your business’s legal affairs and protect your assets. Whether you operate a small LLC or a large corporation, keeping these items in check can help ensure your business remains compliant, well-structured, and prepared.
Cheers to another year!