If you own a business in New Hampshire, making good business decisions might just be your second most important job. Your first is probably to manage the risks in your business.
The starting point for doing this is simple: take a complete inventory of these risks and for each, write down the best way to avoid them. If you’ve never done this task before, consider doing it as soon as possible. When it comes to thinking holistically, there is no substitute for writing.
Here are some basic questions your inventory should answer. Perhaps you have thought of all of them for a long time. But maybe one or two will be new to you.
– Do you have the right business structure? If you are the sole owner of your business, it should almost certainly be structured as a single member LLC, not a state owned sole proprietorship. If your business has two or more owners, it almost certainly should be a multi-member LLC, with a carefully crafted written operating agreement, and never a state-law general partnership. Otherwise, you won’t have legal liability protection if you are ever sued. And that lack could spell disaster for you and your family.
– Do you have the right federal tax structure? Prior to 2018, many New Hampshire businesses were Crown corporations or single or multiple owner LLCs that were taxable as S corporations. Subchapter S is still acceptable in 2021 if you file separately and if your taxable income in 2021 will be equal to or greater than $ 164,925 or if you are filing jointly with your spouse and your joint income is equal to or greater than $ 329,800. But if your 2021 taxable income will be less than these amounts, you risk missing out on a potentially huge federal tax deduction under Section 199A of the Internal Revenue Code – 2% of your income. January 1, 2018, date of entry into force of section 199A. If your taxable income in 2021 is less than the above amounts, you must convert your business structure to a one or more member LLC and your federal tax structure to a sole proprietorship or partnership. If you don’t, you could miss out on thousands of dollars in deductions. And you should take all of your income from your LLC in the form of distributions, not compensation.
– Are all of your insurable assets – for example, real estate, inventory, tools, vehicles, equipment – fully insured? You won’t know for sure unless you talk to a commercial insurance specialist.
– What if one of your key assets is an intellectual property asset i.e. trade secrets, confidential pieces of information that are not trade secrets but are Are copyright, patent rights still valuable to you? These assets may not be easily insurable, but there may be other effective ways to protect them. To find out, check with a lawyer specializing in intellectual property.
– What if one of your key business assets is not property, but rather employees? If so, consider making carefully drafted employment contracts with them. You may prefer the freedom and flexibility you have if they are “at will” employees – that is, if, under New Hampshire law, they can resign at any time. time for any reason, but you can fire them at any time for any reason. But maybe, because of their importance to your business, this freedom is actually less of a blessing for you than a curse. Ask an employment lawyer if, at least to one or two of your employees, employment contracts will make sense.
– Are written contracts between you and third parties important in your business, for example contracts with suppliers or customers? Make sure that these contracts are well written and that they address any issues that they should resolve. And if any of these are absolutely essential in your business, consider reviewing it with a contract lawyer even though it has been in place for years and has worked very well for all parties. A great business contract means no future contract issues – ever. Not all commercial contracts meet this criterion.
– If your business is subject to any type of federal or state business regulation, be sure to comply with those regulations. You may be thinking that, thank goodness, your business is not subject to any such regulation. But there is one type of regulation that every New Hampshire business, large or small, is subject to: COVID-19 regulations. Do you know all the federal and state COVID rules your business is subject to, and are you sure you follow them all? You better be.
– Finally, your inventory should identify all the different types of commercial lawsuits to which you are potentially subject. These can include product liability lawsuits, negligence lawsuits, employee lawsuits, tax lawsuits, intellectual property lawsuits, COVID lawsuits – your list is likely to be long. . But with a little work, and even a brief consultation with a business lawyer, you can at least identify the main ones and take reasonable steps to prevent them.
Here’s a reason to do it: Even if you win, facing a lawsuit is often real torture.
John Cunningham is an attorney licensed to practice law in New Hampshire and Massachusetts. He is legal counsel for the law firm McLane Middleton, PA. His practice focuses on LLC law and taxation, LLC formations, and handling LLC litigation and lawsuits. His phone number is (603) 856-7172. His email address is [email protected] Its website is: llc199a.com. To access all of its Law in the Marketplace columns, visit concordmonitor.com.