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Martin & Reynor, P.C.


Is the Legal Health of Your Business
Due for a Checkup?

By

Gregory M. Johnson, CPA, Esquire
Martin & Raynor, P.C.
Attorneys At Law
1228 Cedars Court, Suite A
Charlottesville, Virginia 22903-4801
Telephone (434) 817-3100
Facsimile (434) 817-3110
E-mail gjohnson@mrlaw.com

At least annually every business should, with the assistance of its lawyer, certified public accountant and other business advisors, assess its “legal health”. This is true for startups as well as businesses that may have reached middle or old age. The issues to be addressed at any stage in the life of the business are as follows:

  1. Is the entity out of which the business is operated in good standing with the State Corporation Commission (have all annual registration fees been paid and all annual reports filed in a timely manner)?
     

  2. Is the legal entity out of which the business is operated still the best type of entity for this business?
     

  3. Is the corporate minute book for the entity up-to-date (complete with all minutes, governing documents such as articles of organization or incorporation, bylaws and operating agreements, shareholder agreements, all canceled and blank ownership certificates, and IRS elective filings such as S corporation application along with proof of filing such as certified mailing return receipt)?
     

  4. Have all tax returns been filed, in the exact name of the entity, and taxes due therewith paid in a timely manner (including income, payroll, sales, use, tangible personal property, etc.)?
     

  5. Is the “tax” entity by which the business is recognized by the taxing authorities still the best type of “tax” entity for this business?
     

  6. Are coverages under all applicable insurance policies still adequate in light of the business conducted and the ever-increasing exposure to multi-million dollar judgments?
     

  7. Are all insurance policies in the exact legal name of the entity?
     

  8. Are all contracts, including leases, employment contracts, etc. in (a) force, (b) good standing and (c) the exact legal name of the entity?
     

  9. Have all elections and options included in those contracts been exercised in a timely fashion?
     

  10. Have all federal and state maintenance requirements for the business’s intellectual property been completed in a timely fashion?
     

  11. Are all assets properly titled in the name of the entity?
     

  12. Are all retirement plan documents current and the operation of such plans in compliance with federal and state law?
     

  13. Is all confidential information belonging to the business adequately protected by confidentiality agreements, covenants not to compete and other physical safeguards?
     

  14. Are shareholder/owner agreements current and all appraisals and insurances policies required thereunder up-to-date?
     

  15. Have all transactions with related persons been on arms-length terms and adequately documented?
     

  16. Is the business in compliance with all federal, state and local laws and regulations with respect to employment, workplace safety and building codes (i.e., workers comp, immigration, wage and hour, OSHA, Americans with Disabilities Act, Age Discrimination in Employment Act, Civil Rights Act of 1964, and ERISA, to name a few)?
     

  17. Is the business in compliance with all federal, state and local laws and regulations with respect to environmental issues?
     

  18. Has the business obtained and maintained all applicable federal, state and local licenses and permits necessary to operate its business?
     

  19. Is the business adequately capitalized?
     

  20. Is the exact legal name of the business entity clearly stated on ALL letterhead, brochures, checks, and all other documents and items of the business which may be seen by third parties?
     

  21. Are separate, accurate and complete accounting records maintained for your business?
     

  22. Is the business’s policies and procedures manual current and complete and is the compliance therewith adequately monitored?
     

  23. Is the electronic information held by the business adequately protected?
     

  24. Are all other assets of the business adequately safeguarded?
     

  25. Are procedures in place to ensure that any deadlines associated with items 1-24 above will be met (i.e., central office calendar, law firm’s calendar, accountant’s calendar, etc.)?