Is Your Business Exposed? Reasons Why It's Time for a Legal Audit
As a business owner, you’re probably on top of your finances and you file your taxes on time. But what about the rest of your business? When was the last time you did a legal audit or checked on the overall health of your organization? How do you know if you’re really in compliance? Staying on top of everything is important to your business’ integrity and it's overwhelming. As the rules and regulations change, your business needs to be prepared to pivot. Hiring a good business lawyer can help ease the anxiety and protect your business.
What is a legal audit anyway?
It's the process of reviewing and analyzing practices and policies. The purpose of a full legal review or audit is to expose gaps and provide recommendations to improve the health of your business. An audit typically includes a comprehensive questionnaire, on-site meetings, and reviews of pertinent documents. These checkpoints or documents often include:
Contracts (Client, Employee, Vendor)
Intellectual Property (IP) Protection (NDA, trademark, etc)
Multi-state and international contracts
Policies (Employee, Tech)
Our firm will provide a checklist to help you gather the documents. Once all requested materials have been received, an in-person meeting will be scheduled. At this time the audit team will meet with designated leaders/officers to discuss preliminary problems and concerns. Third, our firm will provide a debrief or post-audit recommendations. Based on the audit findings, our firm helps businesses develop a strategy to address any problem areas.
A common problem that is revealed during audits is the lack of documentation on roles and responsibilities. Many of our clients, who have business partners, learned that they need a more detailed operating agreement. The operating agreement should outline the responsibilities, performance standards, and expectations for each partner, as well as the consequences if a business partner doesn’t pull their weight. During an audit, we would work to define the roles the business owners play (i.e. are they actively running the day-to-day operations or serving as passive investors). This critical documentation will ensure everyone is on the same page and provide guidance in the event a partner wants to sell their part of the business.
When is the time for an audit?
Right now! An audit should be performed on a periodic basis as part of your business compliance and growth strategy. Think of it as a routine health exam. Our health is our wealth and we should take preventative measures to protect it. Hiring a business lawyer to complete an audit helps minimize legal and financial risks for your business. It also frees up your time to focus on other areas of your business.
You should consider a legal audit especially if you/your business have experienced or is currently experiencing the following:
Financial Success - Larger business deals means more is at stake. Therefore your contracts might need to be updated.
Rapid Growth - DIY legal is no longer an option. It's time to outsource legal responsibilities to create capacity.
Need a Legal Refresh - It’s possible you’re working off old, obsolete legal templates. Time for a refresh.
Ready to get started?
Your answer should be “Yes!” A legal audit is the reality check that all entrepreneurs and small businesses need. A legal audit helps establish an ongoing legal compliance and prevention program. In other words, it's a great investment and one that will offer peace of mind and protection for your business. If you own a business and want to protect it, contact Kliebert Law today.