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Just like doctor’s appointments, car maintenance, and furnace servicing, business owners should be conducting a yearly checkup on their business. Here are 10 important things to consider in order to run your business better and make sure you’re on track to achieve your goals. 

1. Formation of Entity

• Is it time to form an entity to operate your business? Sometimes clients elect to take a wait and see approach to forming an entity and defer the decision until they are more confident that the business will be successful. Operating as a corporation or limited liability company can provide you with significant liability protection and is recommended for almost all businesses.  
• Should you change your corporation’s tax status from a C Corporation to an S Corporation? Or change from an S Corporation to a C Corporation? And limited liability companies can also elect to be taxed as an S Corporation. Generally this decision is driven by how you can best minimize the taxes you pay, and your accountant can help with this analysis.  

2. Books and Records

• Have you filed your company’s annual report with the Secretary of the State’s Office? 
• Is your corporate minute book current? Are the stock certificates in the book or in another secure location? Have the minutes of the annual shareholders meeting and board of directors meeting been prepared and signed?
• Do you have a signed Operating Agreement for your limited liability company? 
• If, as an owner, you lent money to your company, do you have a written promissory note in place? And if you secured the loan with a lien on the company’s assets, is it time to renew the lien? In Connecticut, security interests perfected by filing a UCC-1 financing statement have to be renewed every 5 years by filing a UCC-3 with the Secretary of the State. 

3. Buy-Sell Agreement

• Do you have an agreement in place that controls the rights and obligations of the owners regarding a sale or transfer of the ownership interests? If not, you should consider one, as it can provide protection to all owners. And if you do have a buy-sell agreement in place, is it time to amend it? Buy-sell agreements should be reviewed on a regular basis to make sure the terms remain appropriate as time passes and circumstances change. As a business grows, it may be necessary to change valuation and valuation methodologies to ensure the value of an owner’s interest remains accurate and equitable. And the rights and obligations of owners to sell their interests should be reconsidered regularly, as prohibitions against a sale that may be appropriate in the early years of a business may not be appropriate as the business – and its owners – mature.

4. Mortgages and Liens 

• Is it time to refinance your company’s mortgage or business loan? Interest rates remain low, and you may be able to improve your cash flow through a refinance. As a business matures, loan products that were not available to it as a start-up sometimes become available and can provide the monies necessary to fund the company’s growth or expansion.      

5. Lease

• Has your lease expired, or is the end of the term approaching? Some leases require notice from the tenant to either renew a lease or terminate a lease at the end of its term. A review of your rights and obligations under your lease can prevent an unwanted termination or renewal.
• And if you, like many business owners, own the real estate at which your company operates and leases it to the company, do you have a written lease in place? A written lease is often helpful in establishing the reasonableness of the rent being charged. 

6. Contracts   

• Has anything occurred in the past year that could have been better addressed in your company’s contracts? Purchase orders, employment agreements, non-compete agreements, and other business contracts should be reviewed and amended to make sure they provide the most protection they can for the company.    

7. Employee Manual

• Is it time to adopt an employee manual for your company, or to make amendments to reflect changes in the law or in the operation of your company?  An employee manual can help make sure that employee policies and expectations are universally applied and enforced; this can be the basis for supporting company action if employee issues arise.      

8. Succession Planning

• Is your succession plan in place? It is better to start considering your exit from your business sooner rather than later so that you can properly plan for your retirement or the next phase of your life. Potential buyers include current employees, competitors, or third parties looking to enter the business or the market. Regardless of which option you believe will best work for you, there are steps you can start taking to position your company to maximize the price you receive.  

9. Insurance

• When is the last time you reviewed your insurance policies? It is important to review and adjust limits over time, and to make sure that your company has coverage for new threats as they emerge. For example, in today’s world, coverage for cybercrime is often recommended. 

10. Wills & Trusts

• Is your estate plan in order? Tax and legislative changes, changes in personal and family situations, and changes in personal wealth can all affect your estate plan. A periodic review is important in order to make sure your estate planning documents are still appropriate.