Springfield Business Journal Articles


New Year's Checklist

2015.  A new year for all of us to make a fresh start.  As part of that fresh start, why not use a cold January day to check on matters that are easy to overlook during the year.

Insurance.  Review all of your insurance – personal and business.  How much life, car, homeowner's and liability insurance do you have for you (and your spouse) personally?  Would the amount of life insurance be enough to provide for your family if you died suddenly?  Who is the beneficiary?  Have you named minor children as beneficiaries?  If so, consider other options such as a trust for your children.

How much car insurance do you have?  The minimum coverage in Illinois is $20,000 for injury to one person in an accident, $40,000 for injury to more than one person in an accident and $15,000 for injury to the property of another person.  These amounts are woefully inadequate.  Twenty thousand dollars does not go very far if a person is hospitalized.  On the other side, what if you are hit by someone with minimum coverage, you're injured and your new truck is totaled?  You need to make sure you have enough "uninsured or under insured motorist" coverage on your own policy to make up the difference.

What is your overall liability exposure?  Do you live on land where you or other people hunt, ride four wheelers or swim?  What if someone is hurt?  Check your homeowner's coverage for liability protection.  You may want to add a personal umbrella policy for additional coverage.  Umbrella policies are generally inexpensive and can provide significant additional coverage.

Review all of your business insurance.  Do you have enough property insurance for your building and equipment?  Do you have enough liability and workers' compensation insurance?  Do you have key employees whose deaths would disrupt the business?  If so, should you obtain life insurance on these employees?

Estate Planning.  Do you have a will?  If so, how old is it?  When is the last time you looked at it?  We may all feel broke after the holidays, but we still have assets, and our wills need to indicate how those assets will pass at our deaths.  In addition every adult should have a financial power of attorney and a health care power of attorney.  These documents allow your "agent" to handle your financial affairs and make medical decisions for you if you cannot do so.  There is a new form for Illinois health care powers of attorney as of January 1, 2015, but existing powers of attorney will continue to be effective.

Are you a business owner?  Do you have a succession plan in place?  Threshold questions include: (1) Who should own the business? (2) Who should run the business? (3) How should the new owners acquire the business, e.g., gift, purchase or both?  Is the plan properly funded?

Corporate Formalities.  Many small businesses are structured as corporations.  Corporations must conduct an annual shareholders' meeting.  The meeting may be an actual in person meeting or a "paper meeting" in which everything is done by written consent.  Either way, it is important that you properly document such "corporate formalities."  Your failure to do so could be used as ammunition by those who might try to avoid the liability shield usually afforded by corporations to its shareholders (also known as "piercing the corporate veil").  Among other things, an annual meeting usually includes the shareholders electing the corporation's board of directors and acting on matters requiring shareholder approval.

Most corporations also simultaneously hold their annual meeting of the board of directors. Your failure to do so could be further ammunition in a creditor's attempts to pierce the corporate veil.  At the meeting, the directors should elect officers for the upcoming year and approve or ratify all other items that require board approval.  Also, (to the extent not previously done) the board should prepare minutes to specifically ratify extraordinary corporate events that occurred during the previous year.

A corporation must also file an annual report to the Secretary of State. Failure to file the annual report and to pay the annual fee could result in your corporation being involuntarily dissolved.  (In that instance, the corporate liability shield may well be lost.)  Fixing this problem can be costly.  Also, to the extent you do business in other states, you will want to make sure you are registered to do business there.  Likewise, if you no longer do business in a particular state, now is the time to withdraw registration.

Business Policies.  Do you have an employee handbook?  When is the last time you reviewed it?  Does it have policies on email and social media?  Do you have a disaster plan?  Do key employees know how to implement it?  What are your HR policies?  Are you following the policies?  These items can be tedious and easy to avoid, but you need to have policies in place and follow those policies.  You will be happy that you did in the event of an employment lawsuit or other difficulties.

Vacation.  When was the last time you took a vacation?  Do your employees use their vacation days?  In the stress of our everyday lives, it can seem impossible to get away.  In the words of Nike, just do it.  The benefits of vacation include better health, better productivity, less stress, better mental health, closer family ties, less burn out and new perspectives.  Remember, on your death bed you won't wish you had spent more time at the office.

Previous Article Commerical Lending Basics
Next Article New Year -- New Laws