By Christine Moehl, Employee Benefits & Executive Compensation Attorney and Courtney Kohler, Attorney
Year-end is a great time to reflect on your business and to plan for how you want your business to evolve in 2020. With all the responsibilities and challenges of running a business, it’s inevitable that things like entity maintenance may slip through the cracks. However, if you fail to address important, albeit more mundane, aspects of running your business, these things may result in significant issues arising later. Here are some key areas to address at the end of the year to stay on track with your business’s legal obligations:
Entity Maintenance – Running a business is such a consuming task that even the basics can slip through the cracks. With entity maintenance, each year brings similar considerations. Is your business registry up to date with the Secretary of State? When is the last time the owners held an annual meeting or documented the meeting with minutes? These tasks can often be handled quickly, and they are much easier to address when kept current.
Owner Agreements – Certain documents are critical for the successful management of a business, such as Operating Agreements for limited liability companies and Bylaws and Buy-Sell Agreements for corporations. Use year-end as a time to step back and reflect on all the progress and change that your business has undergone. Has ownership of your business changed? Are the restrictions on transferability of ownership interests no longer valid? If the answer is yes to any of these questions, it’s likely time to consider updating your organizational documents.
Lease Review – The continued right to lease your business premises is sometimes taken for granted. However, failing to carefully review your lease can negatively impact your business if your landlord is unwilling to renew the lease or if the occupancy cost increases dramatically. Reviewing your lease agreement is a great opportunity to access growth opportunities or ensure the continued success of your business. Consider when your lease expires, whether the lease is close to a renewal period and the notice requirements in order to renew the lease term. Having an attorney periodically review your lease will help you avoid being caught off guard by any lease surprises.
Retirement Plan Check-Up – If you have a retirement plan for your business, the end of the year is a good time to review the plan for compliance. You should document all notices that were delivered to your plan participants over the year and make sure that your ERISA bond covers the proper amount of plan assets (generally 10% of plan assets up to a maximum of $500,000). You may also want to ask your TPA to run some preliminary funding estimates before payroll closes for the year, especially if you are considering maximizing your contribution to the plan. Finally, if you are a business owner over the age of 70-1/2 you are required to take your required minimum distribution for 2019 prior to December 31st.
Gear Up for Health Plan Reporting – If your business is an Applicable Large Employer (ALE) under the Affordable Care Act, you must provide Form 1095-Cs for 2019 to your employees by the extended due date of March 2, 2020, although many ALEs prefer to distribute the 1095 forms by January 31st along with Form W-2s. The 2019 Form 1094-C is due to the IRS by February 28, 2020 for ALEs filing on paper and by April 1, 2020 for ALEs filing electronically. Now is a good time to begin compiling the data that you will need to prepare these required forms since the IRS has indicated that no additional due date extensions will be granted this year.
At Saalfeld Griggs, we’re here to help you with the various legal details of running a business. Don’t let these details keep you from getting ahead in your business. It’s our pleasure to assist you in these tasks and free you to focus on operating your business. Please contact a member of our firm’s Corporate and Taxation practice group or Employee Benefits practice group if you need assistance in these year-end tasks.
Christine Moehl is a partner in the Employee Benefits & Executive Compensation practice group and the Agri-Business, Health Law and Non-Profit industry groups. The information in this article is not intended to provide legal advice. For professional consultation, please contact Christine Moehl at firstname.lastname@example.org at Saalfeld Griggs PC. 503.399.1070. © 2019 Saalfeld Griggs PC