Around this time every year, some business effectively shut down, whether physically or mentally. (You folks with restaurants and storefronts that have to work every moment till New Years, sorry). Regardless of your “closing down” situation there are still a few things on your to-do list, whether you know it or not.
I spoke with Charley Moore, Founder and CEO of Rocket Lawyer about some things for start-ups to think about before the end of the year. Rocket Lawyer has created a “Legal Health Score” that goes through some of the basics that every start-up company should consider, in a simple, step-by-step fashion. The closer you are to 100, the healthier your business may be.
Simple things can improve your score, including having an incorporation, doing regular corporate meetings with minutes, or creating employment agreements for your employees. Moore should know about this stuff. He’s helped venture funds and early stage startups, like this small company called Yahoo! (a long time ago) make sure they were set in the proper legal structure.
“The end of the year is a great time to think about the administration of your business,” said Moore. “Think about your corporate structure and consider if incorporating at this time will give you a new year of different tax treatment, or protect your company as it goes into a new phase. If you’re already incorporated, make sure you keep minutes of a corporate meeting at the end of the year. Estate planning is also important. Even if you are a business owner, you are a person first. The way you’ll divide your business should something happen is important, and there are changes to estate taxes in 2011 that you need to pay attention to.”
Rocket Lawyer did a recent survey of 1000 business owners and found one of the main reasons that businesses avoid seeking counsel is the expense. But services online like Rocket Lawyer and others including CorpNet (profiled a few month ago in "A Start-up Helps You Incorporate") can provide you with documents and legal services. Rocket Lawyer also provides connections to lawyers in your area who can assist you when the pre-made forms and services are not enough.
One of the nice features in Rocket Lawyer is the ability to create form legal documents by answering questions using a simple web interface. It took me about 5 minutes to create a letter to send to a customer who is behind in payments.
Finally, funding the business is often something startups are thinking about. Moore said “There is seasonality for fundraising. Heading into January - it's a high water mark for fundraising for loans, venture or angel loans. Yearend is the right time to be prepared to hit the ground running in January - if you are not ready, you may miss the investment calendars for investors.”
You can learn more about Rocket Lawyer’s end of year advice in a new release they published after my interview with Moore. What are you doing to "close out the year" for your start-up?
Finally, I'd be remiss if I didn't mention a very smart program from American Express called "Small Business Saturday." Launched to compete with big box store's "Black Friday" promotions, it has continued past November. Amex card members can get a $25 credit for shopping at small businesses on Saturdays through the end of this year. The website has materials that small businesses can use to promote this effort at their stores. There's also a charity aspect - as more than 1MM people "liked" this effort on Facebook, American Express donated a million dollars to Girls, Inc. Certainly worth checking out, because we all support the Start-ups and small businesses here, right?
Happy Holidays to all!
Denise Richards Jennifer Sky Samantha Mathis Samantha Morton Grace Park
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