4th Quarter Business Audit: Review your Corporate Structure and Liability Protections
The fourth quarter of a calendar year is always a good time to reflect and ask questions only a trusted advisor would ask you about your business.
Questions like, “Are you using the law to your advantage?” or “Have you recently reviewed your corporate structure and liability protections such as insurance?” are just a couple of prompts you may hear from your favorite lawyer.
In this article, we posed those exact questions to a community of small business owners. Here’s what they had to share about using the fourth quarter to conduct a business audit and review of your corporate structure and liability protections.
Build a Strong Relationship with a Dedicated Insurance Agent
While we normally do not review our corporate structure, we certainly take a quarterly look at our insurance products and other liability protections. We work with a dedicated insurance agent, which I believe is critical for every business. Not only can an agent help you find the correct insurance product, but they will assist you in the event of a claim. In comparison to legal services, insurance costs are relatively inexpensive. Comparing the protections offered by insurance with its low cost in comparison to other start up activities, any business would be foolish to operate without the correct policies in place. Other important liability protections include following the corporate form if you are operating an LLC or corporation, putting proper contracts in place with your clients, vendors, suppliers, and partners, and staying organized to make any claims process more efficient and easier for the lawyer you work with (Pro tip - making life easier for your lawyer typically leads to lower bills because we don’t have to spend time organizing files and documents for you).
Robert Reder, Blythe Grace
Do It for Your Clients
Data legislation and debates have been at the forefront of several countries in the last few years. As a service company, it is important to frequently review our structure and liability protections to ensure that we remain compliant with the laws of the countries and states we provide service in. While this may seem like a roadblock for us, we must understand that data is a delicate thing and we use the laws as guides for providing the best services to our clients.
Rex Murphy, Montauk Services
Dedicated HR Representation
As small businesses grow, the need for a dedicated human resources representative increases. Sometimes, employees just aren’t comfortable approaching a CEO or founder within a small business for human resources issues. And sometimes, founders just don’t prioritize HR activities and devote the necessary resources to address the issues. All this leads to a recipe for disaster. Assess whether your small business needs dedicated HR representation by surveying employees, listening to their needs and implementing a solution.
Brett Farmiloe, Markitors
Understand How Working From Home Affects Policies
With the pandemic in full swing, many companies are now working remotely. This means that there may be changes in terms of company liability for those who are working at home and using company equipment. It would be wise to meet with your internal team or call on the legal council to understand exactly what policies need to be enacted with the change in working environments. This can be revisited and revised on a six month basis to ensure that all policies are up-to-date.
Vicky Franko, Insura
Audit Every Six Months
Reviewing your company's corporate structure and liability protection should be something that is done every six months. Laws and policies are ever-changing and you do not want to have a disaster on your hands because you have not reviewed your liability protection in two years and now you have a massive lawsuit on your desk. Instead, having a designated day or few days to sit down and council with your law on all policies is a protective measure that will ensure your company will thrive for years to come.
Carey Wilbur, Charter Capital
Look for New Filing Options
For many companies, they are probably facing some of their hardest financial difficulties ever due to COVID-19. We recently spoke to our attorney and found out there's a new bankruptcy filing possibility called Chapter 5 which is much faster, easier and more beneficial for small business owners. No one wants to file bankruptcy, but if you have to (and can qualify as a small business) then you should file under Chapter 5.
Layton Cox, Marketing Consultant
Reevaluate Your Insurance Types
Service Providers need to consider multiple types of insurance for services they perform. I carry general liability, professional liability and cybersecurity insurance. And based on your company's risk you need to evaluate the level of insurance you need. Business owners need to be aware that because of state regulations and laws, a poorly written employee handbook is worse than no handbook.
Joanne M Elsen, CPA PC