01 Nov Before the Year Ends: 7 Legal Issues Every Small Business Should Review
As the year comes to a close, many small business owners are focused on taxes, budgets, and plans for the coming year. But year-end is also a good time to review the legal side of your business.
Contracts expire. Leases renew. Businesses grow and change. Owners come and go. And documents that made sense when your business started may no longer reflect how your business actually operates.
Before heading into 2027, here are seven legal issues small business owners should review.
1. Review Your Business Contracts
When was the last time you actually read the contracts your business relies on?
Review agreements with customers, vendors, contractors, service providers, and other business partners. Pay particular attention to:
- Automatic renewal provisions
- Termination requirements
- Notice deadlines
- Price increases
- Indemnification provisions
- Insurance requirements
- Personal guarantees
- Non-solicitation or confidentiality obligations
- Dispute resolution and attorneys’ fee provisions
Do not assume an agreement simply ends when its stated term expires. Some contracts automatically renew unless one party gives notice within a specific period.
Knowing those deadlines before the new year can prevent an unwanted renewal or give you time to renegotiate unfavorable terms.
2. Make Sure Your LLC or Corporation Records Are Current
Forming an LLC or corporation is not the end of your entity housekeeping.
Review whether your company’s records accurately reflect its current ownership and management. If an owner has joined, left, transferred an interest, or changed roles, your organizational documents may need to be updated.
For an LLC, this may include reviewing your operating agreement, ownership records, and management structure.
It is also worth checking how your business is identified in contracts and other documents. Business owners sometimes use a trade name or DBA without clearly identifying the legal entity behind it. Your contracts should make clear which legal entity is actually entering into the agreement.
3. Review Your Commercial Lease
If your business leases office, retail, warehouse, or other commercial space, review the lease before you start another year.
Look for upcoming:
- Renewal or extension deadlines
- Rent increases
- Operating expense adjustments
- Insurance requirements
- Maintenance obligations
- Notice requirements
- Options to purchase or expand
- Personal guarantees
If your lease expires in 2027, November or December may be a much better time to start reviewing your options than waiting until a few weeks before the deadline.
Commercial leases can contain notice periods that require tenants to act months in advance.
4. Review Your Employment and Independent Contractor Agreements
Businesses change, and the people working for them change too.
Review your employment agreements, independent contractor agreements, confidentiality provisions, and other personnel-related documents to determine whether they still match your current practices.
This is particularly important if you have workers classified as independent contractors. Calling someone an “independent contractor” in an agreement does not necessarily determine whether that person is legally considered an independent contractor.
Businesses should also make sure their agreements clearly address confidential information, intellectual property, payment obligations, and termination.
5. Look at Personal Guarantees and Personal Liability
One of the biggest misconceptions about LLCs is that forming an LLC means an owner can never be personally responsible for a business obligation.
That is not necessarily true.
For example, an owner may voluntarily assume personal liability by signing a personal guarantee for a commercial lease, loan, credit agreement, or other obligation.
Business owners should know which obligations they have personally guaranteed and whether those guarantees continue after a contract renews, changes, or is replaced.
It is also important to maintain your limited liability through good business practices, financial recordkeeping, and documentation. This includes signing contracts correctly. When signing on behalf of a business entity, the signature should clearly indicate that you are acting in your representative capacity for the company.
6. Review Your Business Insurance
Legal planning and insurance planning often overlap.
Review your current insurance coverage with your insurance professional and make sure it still reflects what your business actually does.
If your company has added employees, purchased property, started providing new services, signed a new lease, or taken on larger contracts, your existing coverage may no longer be appropriate.
Contracts can also require specific types or amounts of insurance. Make sure your coverage is consistent with those contractual obligations.
7. Think About What Happens If an Owner Leaves, Dies, or Becomes Incapacitated
Business succession planning is easy to postpone until there is a problem. Even if you are not planning an immediate change, year-end is a good time to think about the future ownership of your business.
If your business has multiple owners, your bylaws, operating agreement, shareholder agreement, or buy-sell agreement should address what happens when an owner dies, becomes incapacitated, retires, wants to sell, or simply wants out.
For a single-owner business, succession planning is just as important. Who has authority to operate the business if you cannot? Who will ultimately receive your ownership interest? Will your estate plan and your business documents work together, or do they create conflicting instructions?
These questions are much easier to address while everyone involved is available and able to make decisions.
If you are considering buying or selling a business in 2027, preparation should begin well before a purchase agreement is signed. Sellers may need to organize corporate records, contracts, leases, financial information, licenses, intellectual property, and employment records in preparation for due diligence.
Buyers should be prepared to evaluate those same areas, along with the business’s assets, liabilities, existing obligations, and ownership structure.
Whether you are planning for succession, bringing in a new owner, buying a business, or preparing your business for sale, addressing these issues early can make the process much smoother.
Start 2027 With Your Legal House in Order
Year-end business planning is not just about taxes and financial statements. It is also an opportunity to identify legal issues before they become expensive problems.
A business attorney can draft and review your contracts, entity documents, commercial lease, ownership structure, and other agreements to determine whether they still fit your business and your plans for the coming year.
If you own a small business in Oklahoma and have not reviewed your legal documents recently, the end of the year is a good time to do it.
Ready to get your business legally prepared for 2027? J. Miller Law Firm, P.L.L.C. assists Oklahoma business owners with contracts, commercial leases, business transactions, entity matters, and other business law needs. Schedule a consultation to review your business’s legal needs before the new year.