The Small Business Legal Check-Up

10/28/2016 | Articles & Alerts

It’s that time of year when we all get to start fresh. People are making resolutions in an attempt to better themselves. This is certainly a good thing. But don’t forget to make a similar effort with your small business. Here are a few things to consider from a legal perspective.

1. Do I need to update my contract forms? Whether your business is simple or complex, the law of contracts generally governs commercial transactions. Each year the government passes laws that impact contractual relationships in a myriad of ways. If you don’t have a standard form contract, consider whether one might be appropriate. If your company already has a standard contract, consider whether it needs to be revised.
2. Does my insurance cover that? It is not uncommon for small businesses to purchase insurance for things such as a slip and fall on company property to workers’ compensation each year without reviewing their needs. Circumstances, and thus needs, change over time. If you have not recently assessed your company’s risks and policies, now is a good time to do so from a cost and coverage perspective.
3. Who are my consultants? Every small business owner should have an accountant, an insurance agent, and a lawyer they trust. The specialized knowledge each possesses can be extremely helpful and also allow a small business owner to focus on what they are good at – the business side of things. The start of the year is a good time to examine these relationships and make a change if necessary.
4. What is my collection policy? It is already hard enough to get work in this economic environment. Waiting on payment only makes things worse. Collecting payment from customers and clients does not have to be a complete drain on resources. Develop a collection policy – whether it involves legal action or not – and stick to it. Updating your contract to include collection costs can help here.
5. Is my litigation smart? Litigation is often driven by ego, emotion, or some other motivation. Ask yourself whether any of your pending litigation is a smart business move. If not, try to find a way out of it.

These are a few questions to get you started. If you would like a more thorough review, see number 3 above and talk to your accountant, insurance broker, and/or lawyer.