A client called recently to ask me to look at a certain business contract which he wanted to cancel. The contract had an automatic renewal clause and the notice period for terminating was three months. He was too late in terms of being able to cancel and now was faced with honoring the contract for another year. Sound like something that has happened to you?
This client realized that what he needed to do was get his business better organized so that there were digests of contracts that contained the essentials of the contract, and he could set up electronic ‘reminders’ regarding terms. It’s not difficult, it’s just a matter of finding the time to get organized. Do you take the necessary steps to do a checklist and make sure your legal house is in order….that you are organized so that your business can continue to grow?
Here’s one exercise you should do: Review your contracts. In some instances, there are clauses in the contracts that don’t make sense any longer because of a change in the law, or a change in your business circumstances. In many cases, as I illustrated above, there are automatic renewal clauses in contracts which provide for a certain amount of notice (90 days perhaps) in order to cancel in accordance with its terms. You should have a record of which contracts have such time notice fuses for automatic renewals.
Do you have independent contractor agreements? We’re seeing a tremendous amount of scrutiny from the Federal Government concerning whether businesses are complying with the laws regarding an employee and an independent contractor. Just because your consulting agreement provides that there is an ‘independent contractor’ relationship formed doesn’t necessarily make it so. If those consultants are working for you for more than 30 hours a week, and are dedicated to your business, these factors may become indicia that those ‘consultants’ are employees, no matter what your independent contractor agreement provides. And the penalties for not paying employment taxes are steep.
Another business checklist item you need to keep track of is your company’s intellectual property. Have you now developed a new logo or mark, and had it trademarked? Are all your original writing and video used in your marketing and advertising copyrighted? Have you checked to make sure that your marketing and advertising is in compliance with Federal Trade Commission rules that mandate that all advertising is is truthful, and that you have evidence to back-up your claims?
There’s always high risk that go into successful business ownership. Find the time to keep a checklist of your business contracts, your employees and consultant relationships, your intellectual property registrations, and the content of your marketing and advertising , and you can lower your business risks.