Whether you do business as a sole proprietor, are a shareholder in closely held corporation, a member of an LLC, or operate a public company as an officer or director, creating and maintaining good business processes can help limit your business’s internal and external liabilities.
Your business operates most efficiently, profitably, and with least risk if you consider adopting and implementing uniform protocols, policies, and procedures regarding issues like: employee conduct and discipline, employee handbooks, customer service and related expectations, billing processing and payment, timekeeping and wage payment documentation, and periodic reviews related to tax, governance, and regulatory compliance, among other things.
Simply, good business processes create good habits and practices. Good business habits and practices provide consistency, predictability, and uniformity for your business over time which is also good for your “bottom line”. By operating in this manner, you will be better able to evaluate what processes work well and what do not work well, and adjust accordingly. Be smart, be prepared and follow through.
When your business maintains consistent and standard business practices in its normal course of business, these habits also create evidentiary presumptions if those issues ever become a litigated in the future. Consequently, your business practices and habits help mitigate your business liabilities and bolster your legal positions if, and when, disputes arise.
Of course, it is important to ensure your business processes, protocols, policies, and practices comply with related regulations and other law that may apply to your particular business to begin with. Otherwise, you could be creating risks without knowing it. Therefore, you should seek the advice of a good business attorney to help you evaluate these issues since such matters are often complex and fluid over time. Periodic business audits by a good lawyer are a great idea.
We also recommend your business work with experienced business attorneys and tax counsel to adopt and review your protocols, policies, practices, and procedures at the outset of your business and at least annually thereafter. In addition, you should consider further review and consultation when your business anticipates major changes or challenges like the substantial sale of its assets or stock, new investors, new ownership, new leases or lease renewals, purchasing property or major equipment, the assumption of significant or secured debt, the hiring of key employees, changes in the status of employees, any contact by regulatory authorities or disgruntled customers or employees, and if there is any known risk of audit.