It is suggested that we see our doctor once a year for an annual check-up. At an annual check-up, your doctor will ask you a series of questions, examine you and possibly run some tests. Your doctor will then be in a position to assess your health, create a treatment plan for any identified conditions and make overall recommendations that will lead to better health. Your business deserves the same attention and care. Taking the time to step back, assess the 'legal health' of your business and address any identified concerns can help to prevent risks from turning into actual problems, while also increasing the value of your business and making it more appealing to potential buyers.
Here are some of the questions you should ask yourself:
Structure - How is my business structured? If I am operating as a sole proprietor, is it time to think about the liability protection and possible tax advantages that incorporation may offer? If I am incorporated, is there room to achieve further protection of business assets through the use of a more sophisticated corporate structure? Have I done all I can to maximize the after-tax dollars I will receive upon a sale of the business? Have I planned for what will happen to my business if I get sick or, even worse, die?
Regulatory Compliance - Am I operating my business in compliance with all applicable laws? Are all corporate filings up to date? Have I registered the business name, as required by the Business Names Act? Do I have policies in place to address legal obligations (including accessibility, sexual harassment, document retention, use of technology and social media by employees, etc.)?
Intellectual Property - Have all trade-marks and trade names being used by my business been registered in Canada and in any other countries in which the business operates? Is anyone else currently using my business' trade-marks without permission? Have copyright notices been placed on the business' website and on all promotional materials? Am I missing an opportunity to monetize my business' intellectual property by licensing it to others? Do I have appropriate contracts in place with all workers and contractors to ensure that everything they create is owned by the business and that all moral rights have been waived? Have all relevant domain names been secured, with all appropriate top-level domains (.com, .ca., .net, .org, etc.)?
Contracts - Are all of the business' material relationships with third parties documented in written contracts? Is both the proper legal name and trade name of the business reflected in all contracts, purchase orders and invoices? Am I permitted to assign the contracts to a purchaser in the event of a sale of my business? Do these contracts properly protect my business through the use of clauses addressing limitations of liability, indemnities, insurance requirements, etc.? Have any changes been made to these business relationships which have not been reflected in a written amending agreement? Is my business in compliance with its contractual obligations (for example, is it on-side with financial covenants given to the bank)? Are there any upcoming deadlines to exercise options to renew or extend contracts? Do the business' contracts (and invoices) properly disclose applicable interest rates as an annual percentage (as opposed to a monthly rate)?
Possible Claims - Are there any looming limitation periods with respect to unpaid accounts or other claims against customers or suppliers? (If so, your legal counsel can assist you in taking the proper steps to preserve these claims while attempting to resolve the dispute amicably).
Take the time to consider these questions with your legal counsel and address any issues that they may raise. Think of it as preventative medicine...an ounce of prevention now may spare you a pound of legal fees down the road when problems arise. This spring, give you business a legal check-up and watch it blossom!
Trina Fraser is a partner with BrazeauSeller.LLP. She practices in the areas of business and commercial law, Internet and e-commerce law and trade-mark law. Trina is also a registered trade-mark agent. Trina can be reached at 613-237-4000 ext. 232 or at firstname.lastname@example.org. For more information about Trina please visit www.brazeauseller.com.
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