Here are a few business housekeeping items you’ll want to address this year if you haven’t already.
- 1) Protect Your Intellectual Property
- 2) Update Employee Benefit Plans
- 3) Long-Term Strategic Planning
- 4) Review Your Buy-Sell Agreement
Small business owners often fail to plan to protect their company’s intellectual property (IP). IP includes brand identity, which can be protected through trademarks, and also includes unique ideas or inventions that can be protected by patents. Regardless of the specific IP needs, companies often don’t take the time to allocate financial resources for this protection. Instead, they just have a lump sum for the legal budget. Intellectual property attorneys often can provide cost estimates, and can help map out a plan based on reasonable assumptions and available resources for protecting the company’s innovation.
Small business owners also may not know about changes to employee benefit plans that require plan amendments. For example, health flexible spending account plans now can be amended to add a $500 carryover. This is a major change from the traditional ‘use-it-or-lose it’ rule. The carryover feature can be effective for the 2013 year, but only if plans are amended by December 31, 2014.
Another change relates to same-sex spouse benefits. The United States Supreme Court has ruled that the Defense of Marriage Act’s (DOMA) definition of spouse as only applying to a marriage between a man and woman is unconstitutional. That means that any existing plan documents defining ‘spouse’ with reference to DOMA must be amended to include a new spouse definition.
Small business owners often get stuck working in their business when they should be working on it. Running a successful business certainly requires close attention to fundamentals. However, successful businesses also develop and follow a long-term strategic plan that includes annual goals and how to reach them. The beginning of a new year is a great time to develop or revise that vision. And as business coach Sherry Jordan notes, creating a plan but leaving it on the shelf doesn’t help. It’s important for business owners and management teams to review the plan regularly–at least once a quarter–to stay on track and measure success.
Every multi-owner business needs a buy-sell agreement to establish a value for the company and determine how owners can transfer their ownership interests. Often, buy-sell agreements call for an annual updated valuation of the business. Unfortunately, this task is often neglected and the oversight isn’t discovered until after a triggering event, such as the death of an owner. If the buy-sell agreement hasn’t been updated recently, it’s likely that the pre-determined value of the business will be too high or too low. To avoid this unhappy situation, business owners should review their buy-sell agreement annually to confirm that the pre-determined buy-sell valuation or formula is appropriate.