Many see the new year as a time for a fresh start and an opportunity. Business owners are no different, and often this leads them to ask what they should be thinking about from a legal perspective as they chart the course for the next twelve months. Here are some of the questions we often receive from business owners and executives looking to head off trouble at the pass, and answers that may help you think about what you can do to set the conditions for success in 2018.
I’m current on my taxes, but wonder if I’d be ready for an IRS audit if I ever faced one. What can I do now to prepare?
- Records maintenance is always important, but especially with the threat of an audit looming. And If your company has elected S-corporation status, you may have a heightened risk of audit. One of the easiest and most important things businesses can do from a legal perspective is to make sure their corporate records are up to date. The current IRS “lookback” period is three years, so at a minimum a company should have meeting minutes for annual board meetings and shareholder or member meetings covering that period. This is especially true for companies who have experienced significant changes in the company’s ownership or management.
My company has grown and I have new business opportunities outside of Ohio. Are there any steps I need to take?
- All states have some type of registration and reporting requirements for out-of-state companies doing business in that state; the question is whether your business dealings trigger these requirements. Typically, you won’t need to register to do business in a foreign jurisdiction (that is, a state that is different from the one where your company was formed) for one-time transactions. But if you have repeated business dealings or an ongoing presence in that state – for example, you employ a sales representative there – then you probably are required to register. Penalties may be stiff for failure to comply. You should also work with a state-and-local tax accounting expert to determine what kind of tax implications your out-of-state dealings will have.
I’m a manufacturer who orders raw materials from foreign countries. What do I need to know?
- One of the most important things to be aware of is the stiff duties attached to many imported goods. Of particular importance are the “anti-dumping” tarriffs, imposed on imported goods determined by the federal government to be priced below fair market value (the idea being to protect U.S. markets and businesses from unfair international competition). Certain products from China and India tend to have the highest anti-dumping duties attached. In addition to knowing the costs, importers also need to understand the import process and clearly define rights and responsibilities in purchase contracts and agreements with import agents.
I want to protect my company’s competitive edge. How can we protect our company’s image and trade secrets?
- Trademarks, service marks, logos, etc. should all be registered with the U.S. Patent and Trademark Office, and if you have any new ideas or inventions arising from your business process, you should contact a patent lawyer and discuss your options to protect those potentially profitable assets. Also, any trade names used in the course of your business should be registered with the Ohio Secretary of State. Furthermore, companies have confidentiality protections in all contracts where trade secrets are at risk, and they should have policies in place to ensure that new ideas and inventions developed using company resources remain the property of the company and not the individual employee who may have stumbled upon “the next big thing.”
A friend recently discovered that a trusted employee had been stealing money from his company over the course of several years. How can I keep this from happening to me?
- It’s always a good idea to take inventory of your company’s internal controls and understand who has access to sensitive information such as passwords, bank account information, and company records. Generally speaking, the more concentrated this access is, the more scrutiny it deserves. Of course, you don’t want to alienate hardworking employees with unwarranted suspicion, and sometimes issues result from honest mistake rather than malicious intent. But having a firm grasp on “who” has access to “what” may help you identify and neutralize problems before they arise.