A Checklist for Business Owners Business owners and people responsible for managing businesses are often so preoccupied with the day-to-day operations of their enterprise that they overlook the immediate or long-term legal and practical details. To highlight issues common to nearly all businesses, we have created a Checklist for Business Owners and Operators. Consult with your attorneys and other professional advisors to make sure your business is appropriately covered. General Corporate/Corporate Housekeeping º File registration to conduct business in various states or municipalities (e.g. Chicago). º Update Minute Book º Set Board Schedule and Board Goals for coming year - be organized and goals for both the company and the board for the coming year. º Review / update standard contracts (e.g. licenses, SaaS, services agreements) º Complete Officer / Director Indemnification Agreement for any new officers and directors. º File and hold annual stockholders meeting, if applicable. º Ensure your contracts are all set up for an M&A deal, and be aware of those that require consent in a sale or transaction. º Document all board minutes / meetings / written consents. º Review charter by-laws and shareholder agreements to ensure they are up to date. Intellectual Property º Have all employees and consultants executed NDAs, IP assignment, non-solicitation, noncompete agreements? Has anyone excluded IP from their terms of engagement? º Take inventory and confirm ownership of URLs. º Conduct an IP inventory to determine if any should be protected. º Trademark / Service Mark – Verify who holds the rights to these and transfer to the company. Are you using ™ or ®? º Copyright º Patent º Trade Secrets Accounting Processes and Controls º Are your financials audited or not? How do you not comply with GAAP? º Documentation and controls º Segmentation of work processes º Checks and balances º Disaster plan and recovery plans
Employment Matters and Incentive Compensation º Confirm all employee documents are complete and filed securely. º Update Employee Handbook º Update Non-Disclosure / Non-Compete / Non-Solicitation / IP Assignment Agreements for at-will employees and contractors / advisors. Review requirements for customization for each state in which you have employees or contractors / advisors. º Current posters posted for State, Federal and Local laws (including Chicago PTO compliance) º Update and review Benefits Plans º Update and review Stock Incentive Plan / Appreciation Rights Plans º Verify compliance with Section 409A and make sure its valuation is updated and current; verify all options are dated and documented correctly. º Have all option grants been memorialized in minutes of the board or compensation committee? This is critical. º Any employees located out of state? If so, you need to verify there are no special requirements in each state and look at insurance and workmans compensation requirements (i.e. New York). º Have you looked at independent contractor vs. employee categorization? º Review workforce composition / payroll for minimum wage and employee classification compliance. º Have founder vesting agreements been executed? Have all founders filed 83(b) elections? Cyber PII and Regulatory º Review of Terms of Use, Privacy Policy and other disclaimers on web-sites. º Review PII, Credit Card Information, Cyber Issues, Cyber Breach, Email / Text and other Electronic Protections. º Review contracts to assess Cyber Breach Liability, Indemnification and related risks. º If you have sold securities, be sure you have complied with applicable Federal and State laws (including Form D and blue sky notice filings, as necessary). º Any other regulatory issues? (FTC, SEC, FDA, FINRA, etc.) Taxes/Licenses º Payment of Corporate Filing Fees and Franchise Taxes º Sales & Use Taxes º City of Chicago Head Tax and Cloud Tax º City and Other Local Licenses – City of Chicago license º Other Taxes º Qualifications to do business in relevant states º If you are doing any business internationally, even via the Internet, analyze VAT and other taxes. º Discuss all of these with your accountant / tax preparer.
Insurance º Discuss D&O with counsel at least 2-3 months before renewal. D&O coverage is very negotiable, but you cannot do it at the last minute. º Employment Practices Liability º General Liability º Health / Dental / Etc. º Cyber Liability º Advertisement / Copyright º Any potential insurance claims you should have reported? Typically you need to report within 60 days of learning about a potential claim. Make sure to discuss these with counsel before your broker to ensure that you can preserve attorney-client privilege. º Have you looked at other brokers to make sure you are getting the best possible service and products? Estate Planning/Wealth Management º Have you thought about transferring equity at a low-cost basis for future generations / estate planning? º Other succession planning
CONTACT NGE
For more information about how Neal Gerber Eisenberg can serve your business needs, contact Michael Gray at 312.269.8086 or mgray@nge.com.
This Checklist should not be construed as legal advice or a legal opinion on any particular fact or circumstance. It is intended for general purposes only and you are encouraged to consult a lawyer concerning your own situation and any specific legal questions you may have with respect to the potential issues set forth herein.