Is your Business Heading Off a Fiscal Cliff?
By Anthony Soukenik, Sandbergphoenix & von Gontard P.C.
Now that we've had a chance to exhale after watching the media blur coverage of the government's fiscal cliff fiasco, if you're a small business owner, this is a good time to ask yourself if your own business is fiscal cliff-proof. Corporate governance and succession planning has no sense of urgency. The deadlines are ever so random, often determined by the sudden death or debilitating illness of the small business president, a natural disaster or the random departure of a trusted key employee or partner.
How would you answer the following questions?
- Do your articles of incorporation, bylaws or operating agreements reflect the current day-to-day operations of your Company?
- Is your company properly authorized to do business in every jurisdiction that you have a physical presence or nexus?
- Does your personal estate planning dove tail with your corporate planning?
- In the absence of the president, is there a mechanism to appoint a temporary or permanent successor?
- Is the successor your choice, is he or she ready to lead, and will third parties, e.g., financial institutions, recognize the successor?
- Does your Company have "buy/sell" agreements binding the other owners; confidentiality and noncompeting agreements sufficient to prevent the key employees or other owners from walking away from the company with your goodwill?
- Does your Company have personnel files for all employees? Do you conduct annual reviews? Are the annual reviews customized to management's expressed expectations of the employee?
- Are your employees properly documented?
- Do you have adequate insurance to compensate for the loss of a key officer or employee? Or contemporaneously, do they submit to annual executive physicals and regular exercise?
- Do you have adequate insurance to address all risks associated with your business and understand the interrelations between policies and their copays?
- Is your company in good standing with local and state annual registrations and licensing?
- Who has the institutional knowledge of the Company, passwords or keys?
- Will your successor find the important Company documents and what kind of condition are they in?
- Will the sudden transfer of ownership trigger a negative covenant in borrowing or leasing agreements or the qualification of DBE, MBE or WBE status?
- Is your Company party to a collective bargaining agreement which participates in an underfunded multi-employer defined benefit plan and if you have other companies are they exposed the underfunded liability?
- Do you have contingency management plans in the event of a disaster or an interruption of services?
- Have you performed a risk analysis of your Company's operations and prioritized a remedy for the greatest and most likely risks?
- Are your personal assets and Company assets properly titled or as intended?
- Can you find your Company's stock or ownership ledger?
- Is your Company utilizing the best "choice of entity"?
- Are all deadlines for contractual, financial and governmental obligations and Company priorities calendared on "Outlook"?
- Are you a shareholder, partner or member with a fiduciary duty or owe corporate opportunity to another?
It's never too late to get your house in order. If the government can (almost), so can you.
Sandbergphoenix & von Gontard P.C., Saint Louis, MO, Carbondale, IL, Edwardsville, IL, O'Fallon, IL, Alton, IL, USA