Is the sun rising or setting on your business?

During the Constitutional debates George Washington, as President of the convention, sat at the front of the hall in a chair which bore a carving of a half sun.  According to James Madison, at the final signing of the U.S. Constitution, Benjamin Franklin sat, staring pensively at the chair in front of the hall and remarked:

"I have often ...in the course of the session...looked at that sun behind the President without being able to tell whether it was rising or setting. But now, at length, I have the happiness to know that it is a rising and not a setting sun."

The truth is that it is we who decide whether the sun poised half way above the horizon is about to rise and bathe us in rejuvenation warmth and light; or is it about to set, leaving us to struggle through the cold, dark night.

In business, it is the decisions we make and the actions we take which determine whether a new day us dawning and our enterprise will bask in growth bringing sunlight; or whether darkness cometh. The risks which can plunge us into darkness abound.  How we handle our affairs and protect ourselves from liability can make all the difference.

If you own, or manage, a small business there are certain actions you can take which will go a long way toward determining whether your sun rises or sets.  Below is a partial list of some important considerations to which busy business owners often pay too little attention:

 

·         Ensure that the company has the appropriate  liability shield.  Whether it is through the protection of a corporation; limited liability company; or limited liability partnership, the need to protect the personal assets of the owners and managers is essential.  Nevertheless, the number of businesses operating without such protections is alarming.  Even when the business does operate under the protection of limited liability, many companies fail to consider whether certain portions of the operation can be protected from the liability of other areas of the business enterprise.  Sometimes it makes sense to spin off portions of the business to operate as separate entities with their own liability protection.

 

·         Properly maintain the liability shield to prevent it from being pieced.  The existence of the shield is not enough to ensure protection from liability.  The business must be run and operated as a business entity.  Avoid mingling personal assets and expenses with business assets and expenses and, when it is unavoidable, document the steps taken to reimburse the business or the individual; Ensure that the business is holding itself out to the public as a limited liability entity; Ensure that all annual reports are filed and that the proper documentation  of business decisions and meetings are maintained.

·         Protect the company’s intellectual property.  Is the trademark, trade name, service mark, logo and work product properly protected from misuse by others?  Or, is someone else profiting from the hard work and well-earned reputation of the business?  Conversely, ensure that the business is not inadvertently violating someone else’s copyrights. (Are all images on websites, promotional materials and presentations used with proper authority?)

·         Ensure that written and up-to-date agreements are in place with all employees, and independent contractors.  These contract should clearly spells out their duties, obligations and remuneration. 

·         Take steps to protect the privacy, safety and security of all employees, customers, contractors and vendors.

·         Have clear, complete and up-to-date written agreements with all clients, customers, vendors and suppliers.

While this list is incomplete, it is offered, not as specific and complete legal advice, but in the spirit of education in order to encourage our fellow business owners and operators to give some thought to the areas of their business in which they may be at risk.  Whether the sun is rising or setting is often in our control, if only we would choose to exercise that control.  The goal is avoid the risks and liabilities which can turn a bright day full of possibilities and promise into a darkening night which must be endured and survived.  Proper legal planning, advice and counsel can help ensure that every sun is a rising sun.

-          Carl Maughan.  Owner, Maughan Law Group LC.

Maughan Law Group  LC provides out-sourced general counsel services and targeted legal advice to small / medium sized businesses. Our mission is to provide custom legal advice, counseling and guidance which is integrated with our clients’ strategic business objectives.  This allows our clients to focus on business and helps them avoid the misstep which can turn a promising future dark.  In short, we help them grow.