Introduction
Regular legal assessments help small businesses preemptively address legal issues, ensuring compliance with laws, optimizing tax strategies, and effectively managing risks. This guide is tailored for Alberta small business owners, offering a roadmap for identifying potential legal concerns before they become legal problems.
This guide covers corporate governance, contractual obligations, compliance, and more, focusing on actionable insights for incorporated business owners.
Legal Disclaimer: This guide is for informational purposes and does not constitute legal advice. Contact our Alberta business law firm if you require help with specific issues.
1. Corporate Structure
☐ Review Business Structure: Evaluate if your business structure aligns with your current and future needs. Determine if changes are required for directors, officers, and shareholders.
☐ Structural Adjustments: Explore restructuring options such as creating a holding corporation or establishing a family trust for better tax planning and asset protection. Assess the benefits and implications with your legal and tax advisors.
2. Corporate Records and Internal Agreements
☐ Minute Book Maintenance: Ensure your corporate minute book is complete and up-to-date. This includes articles of incorporation, amendments, bylaws, resolutions, and minutes of meetings. Regular audits by a legal professional can identify and rectify gaps.
☐ Shareholder Agreements Review: If you don’t have a Unanimous Shareholder Agreement, consider having one prepared to protect your business and its owners. If you have a Unanimous Shareholder Agreement, it should be reviewed at least annually to address any changes in ownership, strategic direction, or legislative updates. This review should include buy-sell clauses, voting rights, non-competition restrictions, and dividend policies among others.
3. Contracts and Legal Instruments
☐ Comprehensive Contract Audit: Review existing contracts with stakeholders, including employees, suppliers, and landlords, for compliance and alignment with current business objectives. Identify any contracts that need renegotiation or renewal. Ensure that any future contract deadlines are marked in your calendar.
☐ Clarify Employment Status: Distinguish between employees and contractors in all agreements to avoid misclassification and ensure compliance with labor and tax laws.
4. Intellectual Property Management
☐ IP Portfolio Audit: Conduct an audit of your intellectual property assets, ensuring all valuable IP is protected through appropriate registrations (patents, trademarks, copyrights). Plan for timely renewals and monitor for infringement.
☐ Trade Secret Protocols: Implement protocols to protect trade secrets and confidential information, including nondisclosure agreements for employees and partners.
5. Employment Law and HR Policies
☐ Policy Updates: Regularly update employment policies and handbooks to reflect current employment standards and human rights legislation. Include remote work policies, if applicable.
☐ Training Programs: Develop and implement training programs on workplace safety, harassment, and discrimination to promote a positive work environment and reduce legal risks.
6. Tax Obligations
☐ Tax Compliance Review: Work with your accountant to ensure adherence to all provincial and federal tax obligations, including GST/HST remittances and payroll taxes. Consider a pre-emptive tax audit to identify potential issues.
☐ Tax Planning: Explore opportunities for tax optimization, such as income splitting and tax-deferred investments, within the legal framework.
7. Regulatory and Industry Compliance
☐ Licenses and Permits Audit: Verify that all necessary licenses and permits are current and that your business operations comply with local, provincial, and federal regulations. This includes health and safety, environmental, WCB, and industry-specific regulations.
8. Financial Management
☐ Financial Health Assessment: Beyond reviewing financial statements and audits, assess your company’s financial health by examining cash flow, debt levels, and investment strategies. Consider the engagement of a financial advisor for comprehensive planning.
☐ Shareholder Distributions: Review your current strategy for distributing business profits (dividends vs. salary) and determine whether adjustments are required based on your current and future needs.
9. Real Estate and Asset Management
☐ Real Estate Compliance: Ensure that all leased or owned properties comply with zoning laws and that leases are current and reflect market conditions. Plan for renewals and renegotiations as needed.
☐ Asset Distribution: Consider whether it makes sense to implement a holding corporation or diversification strategy to separate assets from your business operations, such as transferring significant assets to a separate corporation.
10. Dispute Prevention and Resolution
☐ Risk Management: Identify areas of potential legal disputes and implement strategies to mitigate these risks. This might involve revising contracts, improving communication channels, or establishing clear dispute resolution mechanisms within agreements.
☐ Stakeholder Review: Have open and honest discussions with the stakeholders of your business to ensure that the business remains aligned with their goals and objectives.
11. Insurance Coverage
☐ Insurance Review: Conduct an annual review of your insurance policies (liability, property, cyber, etc.) to ensure coverage is adequate and reflects your current business operations and asset values.
12. Digital Compliance and Security
☐ Digital Asset Review: Regularly review your digital assets, including websites and social media, for compliance with privacy laws and cybersecurity best practices. Ensure customer data is handled and stored securely.
13. Future Planning and Succession
☐ Succession Planning: Develop or update your business succession plan, including wills, powers of attorney, and shareholder buy-sell agreements. Consider the implications of your departure on the business’s continuity and governance.
Conclusion
Completing an annual legal checkup is a critical exercise to ensure your business remains compliant, competitive, and prepared for future challenges. This guide offers a comprehensive checklist to identify and address potential legal issues proactively. For detailed advice tailored to your specific circumstances, engage with legal and financial professionals.
Remember, staying proactive about your legal health is as crucial to your business’s success as its financial and operational aspects. Regularly scheduled legal checkups can save time and resources, as well as help to avoid potential legal pitfalls in the long run.