As with so many things in life, some of the same virtues that help small businesses succeed can also lead to their demise. Fortunately, much of that risk can be lessened through proper operational procedures.
For example, the owners and managers of small businesses often know each other before they go into business together. Sometimes, they’re even related. Preexisting relationships can help propel small businesses forward, especially when there are high levels of trust and competence.
Unfortunately, however, familiarity is sometimes accompanied by a lax attitude toward operational formalities with a general “we can trust each other.” Issues may develop not on trust or a lack thereof but from a different perspective of the next steps as the company grows and new strategies need to be implemented to reach their goals. Owners and managers may skimp in critical areas such as:
- Governing documents such as articles of incorporation, partnership agreements, and bylaws;
- Solid or regular auditing and accounting practices; and
- Shareholder meetings on crucial decisions and minutes.
In worst-case scenarios, business and personal funds are commingled or used for improper purposes. This can open the door for liability. In litigation, an opposing party will request the accounting and discover the business funds are commingled with personal funds, meaning now the personal funds can be reached in the lawsuit.
The good news is that if you are just starting out, it is easy to avoid all these issues and the accompanying potential for lawsuits and tax problems. We can provide trusted advice and help position a small business in the most favorable circumstances for that unique business.
Here are some examples of the services a trusted legal advisor can provide:
- Assistance in identifying recordkeeping products and in establishing high-quality recordkeeping practices;
- Helping owners understand the potential consequences of a lack of proper documentation;
- Ensuring that clients know the deadlines for business and tax filings; and
- Explaining the importance of keeping personal and business finances separate.
Perhaps most importantly, a skilled business lawyer can help you structure your operational strategies properly. This can be invaluable in helping your business avoid pitfalls and liabilities along the path toward success. We like to begin with getting to know your whole business, not just the legal side; but, also truly understanding your revenue model, how it serves your life, your team, and your clients. Then, we can advise you on the best strategies for a business that meets not just your business objectives but serves your life as well.
Schedule your LIFT Strategy Session with us today to get started!
This article is a service of Davidek Law Firm, PLLC. We don’t just draft documents; we ensure that families and business owners make informed and empowered decisions about life and death, for themselves and the people they love.