The first quarter may be over, but there is still time to reach your business goals in 2016. Just be careful to do so without getting distracted from critical steps to protect your business.

 

It is possible to work smarter and not just harder to reach those 2016 goals. Here are three ways to avoid some common business mistakes with serious legal consequences:

 

1. Document Everything as Completely as Possible

 

Documentation is an effective way to plan for the worst while reaching for the best case. Many companies push these duties off in order to juggle all of the other operational demands. Don’t make that mistake. A few areas to check:

 

  • Formation. Entities are not official until the documentation is filed with the Secretary of State. There have also been some statute changes in Minnesota which create new pitfalls for those who are unfamiliar.
  • Share/equity. Selling a business or part of a business can be a taxable event. That tax burden can depend on how the transaction is documented. Consult with a CPA and/or a business lawyer to create a strategy to minimize this tax exposure.
  • Contracts with clients. A simple contract can go a long way in many circumstances. Make sure the agreement outlines what happens when things do not go as planned.
  • Succession Planning. Companies can continue beyond the loss of the founder, divorce, or other challenging circumstances. Make sure to allocate rights and logistics in the company documents before these unexpected events happen.

 

2. Cautiously Leverage Technology

 

Technology is a double-edged sword for many businesses. Many of the largest data breaches in history have happened through the computer systems of suppliers. At the same time, technology is necessary to make business happen from anywhere. A few steps to minimize this risk:

 

  • Bring Your Own Device. Employees or vendors that can BYOD to use or access the company system create tremendous risks. Avoid this complication by establishing a clear BYOD policy, provide training, and obtain acknowledgments.
  • Implement Reasonable Security Measures. Invest in making sure the company’s most important information is protected and that measures are properly implemented.
  • Create an Incident Response Plan. Bad things happen. Write down, test, and communicate a plan to ensure that the right measures are taken when they do.

 

3. Keep your Eye on the Benjamins

 

  • Tailor invoice terms. Generally, there is no legal requirement for a net 30 approach. Consider a net 10 or payable on receipt where cash flow is tight or payment is slow.
  • Charge interest. Payments are sometimes late, but that is not something your company should finance. Establishing the right to collect interest at the maximum amount can be a powerful deterrent to prevent delinquent payments.
  • Include attorneys’ fees provisions in all contracts. Collecting on a receivable can be expensive. Establish a right to collect attorneys’ fees in all agreements in order to minimize losses should things go poorly.

 

Partnering with the right advisors can help to lay the foundation for a strong 2016 for any company. Seeking help from professionals also no longer has to be overly expensive. In fact, she might just save your company more in the long term by avoiding serious complications. Make sure to shop around to find the right professional legal support for the needs of your company.