Governing documents lay out the relationship between the owners and the business. Some of the most common governing documents are bylaws, company agreements, partnership agreements, shareholder agreements and buy/sell agreements. The type of governing documents your business needs depends on the type of business entity and how it is managed. The governing documents set forth how the business will add new owners, how an owner may be removed (voluntarily or involuntarily), management structure, how profits and losses are split, how distributions will be made, how the company may be terminated and many other important issues that arise when running a business. It is important to speak with an experienced business attorney to help you put the correct agreements in place. Many business owners neglect this important step in the process of starting a business, and are often caught off guard when issues arise. Having the documents at the start of business helps to eliminate conflict and confusion in the future.
If your business will have employees, it is important that each employee understands what is expected of him or her from the very beginning. All businesses with employees should have a comprehensive employee handbook that sets forth policies related to reviews, compensation, vacations, a code of conduct and many other issues that arise when working with employees.
In addition to the traditional policies, business owners must also address the use of social media by employees and what employees can and cannot say or do with personal social media accounts when relating to your business. Violations of social media policies is becoming a hot area of contention between employees and employers. Every company should consider creating a comprehensive policy to address social media etiquette for employees when referencing the business. Also, if your business allows employees to use personal devices (such as cell phones and tablets) for work, the business needs a comprehensive device policy.
Finally it is important to make sure that your workers are classified correctly as either employees or independent contractors. If you are not sure how to decide, review my previous post or contact an experienced business attorney. Incorrect classifications can have serious tax consequences for your business.
For some new businesses, intellectual property may be its most important asset. Intellectual property is property that comes from some type of creative process, such as a trademark, patent or copyright. Therefore it is important to have a policy in place outlining who owns the property (the creator or the company), who it will be used and how IP created by employees will be treated (is it automatically considered as owned by the business). Speak with a business attorney that also understands intellectual property to make sure that you have the proper protections in place federally and in the state of incorporation of your business.
Every business needs to have a comprehensive policy regarding accounting issues. It is important to have the ability to create and understand the many accounting statements used by your business. Business owners also need to make sure that he or she is familiar with deadlines for required business filings (federal and state) and not to just rely on your accountant or bookkeeper to meet those deadlines. Sit down with your professional adviser and create a calendar of all required filings to ensure that each of you are on the same page and informed.
Having policies for each of the aforementioned key areas will help to ensure that your new business will continue to run smoothly and can eliminate future issues.
Charlotte Key is an attorney that focuses on business law, estate planning and probate law.