With 2021 coming to a close, you’re probably looking forward to winding things down after another tumultuous year. Before you do, it’s a good idea to conduct a review of some of the legal aspects of your business to make sure everything from your incorporation paperwork to employee handbook is up to date, compliant, and serving its purpose. It feels great to know that you’re staying on top of things and you and your business are protected.
In this article, we raise a few key issues for you to review and consider as you move toward the new year. If you have questions or need help with any of these items, we are here to help.
- Update and file annual statement with the State of Michigan. This reminder presumes that if you are operating a business in Michigan, then you have already incorporated the business as a limited liability company (“LLC”) or other legal entity. If you haven’t, you should, because otherwise you’re potentially putting your individual assets at risk for liabilities incurred by the business. If you are incorporated, then make sure to file your annual report on time. The deadline for filing an LLC annual statement in Michigan is February 15, 2022. However, before filing, make any necessary updates to the annual statement. Did your registered agent or office address change? If so, your annual statement should reflect those types of changes.
- Conduct Shareholder meeting/Annual board meeting. The benefits of running an incorporated business in Michigan, such as limited liability, come with corresponding responsibilities. Business owners must adhere to certain “corporate formalities,” one of which may be having an annual meeting of shareholders and/or board members. It is during the annual meeting that new board members may be elected and other major corporate actions ratified and recorded into the official records of the business.
- Review contracts. It’s important to review the terms of conditions of contracts your business is a party to because some may include automatic renewals that you were not aware of and may not desire. End of year is also a good time to determine whether you want to renegotiate any terms in contracts with vendors or customers/clients.
- Get your tax records in order and make any required tax payments. Before the rush of the new year starts, make sure you have your tax receipts, financial statements and reports, and other records you may need from 2021 in order. In addition, make any required state or federal tax payments before year end so you don’t incur any unnecessary penalties or interest.
- Send out 1099s. If you used independent contractors in 2021, send them 1099-MISC forms by January 31, 2022. The penalty for failing to do so varies from $50 to $270 per form, depending on how long past the deadline the business issues the form.
- Make sure employment policies are up to date. If you have employees, take a fresh look at what your employment policies and procedures are and how you are communicating and enforcing them. There has been a massive amount of change in federal and state employment laws and regulations in the last couple of years, so it’s a good idea to conduct a review, as well as to update your business’ employee handbook—or create one in the first place.
Needless to say, there is a lot that goes into running a successful—and compliant—business in Michigan. Some of the “to-dos” listed above are simple, while others are complex. Don’t worry— we are here to help you through it. If you have any questions or require assistance, please contact Zana Tomich, co-founder of the law firm Dalton & Tomich.