How To Legally Prepare For The New Year
By far and away, my #1 piece of advice in legally preparing for a new year?
If you want things done right, they can't be rushed.
Of course, it's hard to plan ahead if you don't know in advance what your business will require, right?
Therefore, I hope this post will help to clarify & demystify the time clock a bit, so you can plan ahead prudently for the year to come. One thing to note: (aside from IRS rules), there are few legal requirements with a specific date or day of the year attached; instead, most of your legal deadlines will be based upon your legal needs, after you plan ahead. I’ll explain more below:
Assess your business’ annual requirements
For example, if you have an LLC, you’re required to file articles of renewal each year. In Oklahoma, this document must be filed on the anniversary of your LLC filing, with a $25 filing fee. This information will be found on your state’s Secretary of State website- make sure you take a look, and plug that date into your calendar now.
Estimated time to complete: 15 minutes
Due date: put a recurring reminder in your calendar for 11 months from your filing date- this will give you plenty of time to prepare for your annual filing.
Look at your contracts
One if the most important steps you can take for your business is ensuring that is has a strong contract in place- protecting both you and your clients. The concept of determining when exactly you should seek out a new contract is a tricky one, but you must take these factors into consideration:
You must have a contract prior to beginning any work with clients
If you need a custom-drafted contract, recognize that it will take your attorney a fair amount of time to draft it for you, especially during busy seasons. Start early- conservatively speaking, start the process three months before you want the contract.
In general, if you’re looking for a custom contract, allocate at least 3 months (from the date you contact your lawyer, until the date the final document is in your hands) to get into your attorney’s calendar. This is a generous estimation, but that’s for the very reason I mentioned earlier: you never want to leave your legal work to the last minute, being rushed to be completed.
Estimated timeline: The entire process, from the commencement of the due diligence search, until you have the paperwork in your hands can take anywhere from 6 to 12 months. This is quite the range, of course; most of my clients’ cases fall somewhere around the 8/9 month range. Between the 5th and 6th year following your registration, you‘ll need to file a Declaration of Use to maintain an active registration Action step: first, think backwards. Figure out when you would need the trademark- if it’s a year or less from now, you need to start the process by contacting an attorney. Once you have the trademark, put the date of registration on your calendar, and make a calendar reminder 4 years after that date. This will be early, of course, but allows you time to find a good lawyer (and if they’re good, they’re probably busy, and will need time to get you on their calendar).
Formation Changes (Restructurings, adding or splitting from a partner, etc)
There’s also a time-based reason for you to consider this with the start of the new year. For example, if you want to elect for your LLC to be taxed as an S corp, you must file your election either within 75 days of forming your LLC, or at the start of the new year. Therefore, it’s critical to examine this consideration at the end of the year.
Do you have a corporation? Take a look at your corporate resolutions and meeting minutes to see what requirements there are for your corporation.
Simply put, these types of transactions should be contemplated and begun 12 months or more from the date of when you actually need to finalize the transaction. What might require structuring? Electing a new tax form, spinning off from or bringing in new partners, etc.
Much like tax matters, I do not give any advice on insurance requirements. However, the end of the year is the best time for you to examine what insurance your business needs, and reach out to a local financial advisor who can point you in the right direction. Full disclosure: my husband is a financial advisor, and an advisor in his office focuses solely on insurance requirements for small business advisors. Working with him has been such a game changer for my small business- not only has it saved me a ton of time and money, but I know that I am working with a professional rather than just hoping that what I google is accurate. I can’t put a dollar amount on my peace of mind.
Before I get started, there is one thing I tell each and every client/potential client: in order to have a sound business, you need to have three people on your team: a good accountant, lawyer, and financial advisor. In my opinion, if someone has to be licensed by the state in order to provide their services, or carries a fiduciary duty with their clients, there is no sound reason why I would rely on my own “research” (read: Google) to try to figure it out on my own.
Get your taxes/financials in order
I will be the first to tell you that I don’t practice tax law or give tax advice (although I am excited about some things coming down the pipe in this regard in 2018). However, you need to make it a priority to have your finances in order for your bookkeeper/accountant at the end of the year. Not only will having reconciled books give you a fresh start to the new year but examining them now will allow you to make key investments and purchases that might be necessary for deductions, etc. Most importantly: get your 1099’s in order. List out any subcontractors you’ve paid more than $600 for 2017. They should fill out a W-9 now so that you aren’t both racing the clock during tax season to get this done. This isn’t something you can skimp on either- the IRS will levy a $30-$100 fine for each form you neglect to send or send late. If they find you intentionally did not fill out this form, you could be facing a minimum penalty of $250 per form.