In last month’s blog post, we discussed documentation that provides a strong foundation for starting your business. In this month’s half of our two-part series about keeping your corporate house in order, we look at documents that will help your business stay on track and moving forward.
1) Biennial statements
Every domestic and foreign business corporation, LLC, and LLP in New York must file biennial or triennial statements with the New York department of state. Only sole proprietorships, partnerships, or non-profit organizations are exempt from this filing requirement.
For those affected, these filings are required to maintain “good standing” with the state. Companies that do not file their biennial or triennial statements will be designated in the public record as “past due” and cannot get a certificate of good standing — a critical document for securing financing, buying or selling real estate, and most, if not all, corporate transactions.
The cost to file a biennial or triennial statement is less than $10, so file your statements and avoid losing your company’s good standing.
2) Buy/Sell Agreements and provisions
Business relationships are always changing. It’s hard to imagine at the outset, but partners may eventually leave, retire, become critically ill, or unexpectedly pass away. If that happens, what will become of the business? How will shares be sold, and at what price? Will you be able to pass on your part of the business to an heir or do the partners want to make sure they do not end up partners with another partner’s spouse or child who knows nothing about the business?
When you set up a buy/sell agreement, you answer those questions in advance. Setting the rules of the transition long before a fundamental partnership change ensures that the transition goes smoothly — and gives you some peace of mind for the future.
We cannot emphasize strongly enough how critical a comprehensive buy-sell strategy is for EVERY business.
3) Plans and Policies for Regulatory Compliance
Businesses must be aware of the regulatory mandates in their industry and are required to conduct internal audits and have policies in place to correct any areas of noncompliance. For example, health care businesses must have plans for ensuring compliance with federal and state anti-fraud and abuse laws, government regulations and third-party payor requirements with respect to Billing, HIPAA Privacy and Security, the False Claims Act, OSHA requirements, and many more. These requirements are in addition to any licensure or certification requirements specific to the health care provider and the numerous financial and employment laws governing businesses generally. Loganzo & Mantell helps health care providers stay current on health-related legal requirements and works closely with financial advisors and labor and employment counsel to assist businesses in ensuring overall compliance.
4) Contracts
Do you know what contracts your business needs to operate responsibly and intelligently? If you are contemplating a business venture or seeking financing, do you have non-disclosure agreements (“NDA”) protecting your proprietary and confidential information? Do your client and vendor contracts limit your liability, and include robust provisions if the other party does not make payments when due? Do you need employment or independent contractor agreements with key employees that include enforceable deterrents that preserve your customer base?
We can help draft agreements for your business that are tailored to meet your specific needs. Consistent with best practices, we recommend that business agreements be indexed and tracked to ensure they are signed, current, and maintained in a secure and accessible place.
5) Insurance and Liability Coverage
Businesses should regularly review the adequacy of their insurance policies. It is essential to have insurance coverage that is standard for your industry and geographic area and that is consistent with your owners’ risk tolerance. Does your insurance extend to all business locations? Does it cover all individuals connected to your business (directors, officers, employees)? Does it cover property damage? Personal injury? Theft? Malpractice? Cybersecurity? Business cessation? Other areas of risk? We recommend that you discuss your coverage with your broker or carrier to be sure your owners understand its breadth and limitations.
It might also be appropriate for your business to utilize liability release forms to provide another layer of insulation from legal responsibility for property damage or injuries. For example, liability release forms might be advisable for corporate events or activities that involve an identifiable area and degree of risk.
Contact Loganzo & Mantell PLLC
Now is the perfect time of year to review your business contracts and to conduct a compliance and risk analysis. Our team can help. Contact Loganzo & Mantell PLLC to learn more about our services.
Loganzo & Mantell PLLC
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