Is your Business Heading Off a Fiscal Cliff?

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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.



Anthony Soukenik 121pxAnthony Soukenik
Sandbergphoenix & von Gontard P.C., Saint Louis, MO, Carbondale, IL, Edwardsville, IL, O'Fallon, IL, Alton, IL, USA
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