By John A. Moscati, Jr.
Lose weight, exercise more, spend more time with my family . . . making and breaking New Year’s resolutions is all the rage this time of year. When it comes down to it, most resolutions revolve around trying to establish good habits, or break bad habits. Why not use the New Year as an opportunity to establish some good and break some bad business habits as well!
Here are five “New Year’s Resolutions” that we suggest you consider adopting for your business as you head into 2015:
- We Will Keep Our Minute Book Up to Date. All corporations, and most LLCs should have regular meetings of their governing board. Minutes of these meetings (or written consents, where meetings are not held) should be recorded in the business’ minute book. At a minimum, one meeting a year is recommended for most businesses, with additional meetings (or action by written consents) when significant issues arise. January is a perfect time to update your minute book to catch up on decisions that were made during the prior year that might qualify as being “outside the ordinary course of business.” This can include things like bonuses, executive compensation, entering into new leases, equipment purchases, etc. Having these items formally approved by your governing board shows that your business is “respecting the corporate formalities” which can be a key issue in protecting officers and directors from potential personal liability.
- We Will Schedule and Hold an Annual Meeting of Shareholders or Members. Most corporations and LLCs are required to hold an annual meeting of their shareholders or members. Many fail to do so. This can result in shareholder dissatisfaction and a lack of confidence in management. Ultimately, if shareholder meetings go unheld for too long, it can expose the business or individual managers to liability. Holding an annual meeting does not need to be a confrontational exercise. Generally, it is an opportunity for management to tell shareholders or members how the business performed in the prior year, keep them informed about plans for the coming year and have the shareholders vote to re-elect the Board of Directors or managers. The election of the board is generally the only real business item on the agenda at the annual meeting.
- We Will Update Our Buy-Sell Valuation. Many businesses have Buy-Sell Agreements among the owners which call for the value of the business to be agreed upon annually, or uses a formula to determine the value of the company. As tax returns and financial statements are being completed, it is a good time to look at your Buy-Sell Agreement and verify that any agreed upon value or valuation formula in the Agreement still works for the business.
- We Will Put Commission and Bonus Agreements in Writing. Many states, including New York, require that employers enter into a written agreement with any employee who is paid on commission. Failing to have a written agreement can result in a presumption that the employees’ recollection of the commission structure is the correct one. This can result in significant expense when a dispute arises. Commission agreements do not need to be complicated, they just need to get done!
- We Will Update Our Employment File, Notices and Posters. Both state and federal employment laws require the posting of certain notices in the workplace. Similarly, there are rules requiring that written notice of compensation be provided to employees on an annual basis. Finally, all employers are required to maintain up-to-date employment documentation for their employers. The start of a new year is a good time to make sure you are in compliance with these rules. Many payroll services will assist you in maintaining compliance if you ask.
Happy New Year and good luck keeping your 2015 New Year’s business resolutions!