Every business, regardless of size, occasionally needs a check-up. The best practice is to annually review your procedures, agreements and business practices to see what works and what needs changing. Here is a small business health check to help you get started.
SMALL BUSINESS HEALTH CHECK-UP
I. General Information:
A. Name
B. Address
C. Business entity, if any
D. Number of members/shareholders/partners
E. Are the partners related by blood or marriage?
II. Protection Against Liability
A. Are you utilizing a limited liability entity such as an LLC or S-corporation to protect your personal assets?
B. Is the limited liability entity you are using right for your business?
C. Are you holding annual meetings as required by your Bylaws or Operating Agreement and maintaining minutes of those meetings?
D. Are you using separate checking accounts for your business and personal expenses?
E. Are your directors, officers or members protected from liability and indemnified?
III. Employee Relations
A. Have you collected the appropriate information from your employees to ensure their legal status?
B. Do you have an employment handbook with policies to protect and guide you and your employees?
C. Have you filed the required forms for unemployment and payroll withholding?
D. Do you have policies in place to avoid discriminatory employment practices in hiring, firing and employing people?
E. Are you properly classifying people as employees or independent contractors?
F. Do you have well drafted non-compete and non-disclosure agreements?
IV. Lease Agreements
A. Are your office or equipment leases flexible?
B. Do you clearly understand your lease costs?
C. Are the leases automatically renewable?
D. Do you have a deadline to provide notice to avoid an automatic renewal provision, and do you have a system in place to remind you of the deadline?
E. Have you provided ways to void long-term agreements if there is a change in circumstances?
V. Clear Contracts
A. Are your company’s important agreements set forth in carefully drafted written contracts?
B. Do you have a system for keeping track of important obligations and notice requirements under your contracts and agreements?
C. Have you structured your contracts to minimize personal and business exposure to liability when possible?
D. Can the average person understand your contract?
E. Does your company’s agreements contain protection from liability for defective products and services?
F. Do you have protection in your default clauses so you can recover interest, attorney fees and other expenses if you have to make efforts to collect from a customer?
VI. Litigation Prevention
A. Do your contracts require parties to resolve disputes with cost-effective arbitration or mediation provisions?
B. Do your agreements limit the other party’s right to sue you?
VII. Compliance with Laws and Regulations
A. Does your company undergo periodic legal checkups to ensure compliance with the latest laws and regulations?
B. Do you have current permits for all your business operations?
C. Do you know what your company’s environmental obligations are?
D. Is your advertising truthful and not deceptive?
E. As you expand into new states, are you properly registering your business?
F. As you work in other states, are you paying taxes to the proper local, state and federal agencies?
VIII. Internet Business
A. Is your website content protected?
B. Is your use of third party content allowed?
C. Is your domain name protected?
D. Is customers’ information, such as credit card information, secure?
