As a business owner, you are probably used to dealing with all types of rules and regulations. You regularly deal in contracts and work with outside vendors. You also make sure to file your taxes on time and that everything is done right all year long so as to avoid getting audited by the IRS. But, taxes aren’t the only things that should be audited. It’s not surprising that business owners turn to their financials to determine whether their company is in good shape from year to year. And while this is definitely important, finances are not the only thing that needs to be monitored. The rest of your company needs to be checked too.
The process of a company checking itself out is referred to as a “legal audit.” Or, to put it less formally, a legal audit is like a health check on the entirety of your business. But what does this really mean? And why are legal audits necessary? Below we discuss the top reasons why you need to be doing legal audits of your business.
1. Contracts
A legal audit involves the detailed review of every aspect of your business, and this includes the review of any and all contracts you have executed, as well as the documents you use for boilerplate language. As with the financial market where changes can happen suddenly, laws and regulations can also change. Contract language that you put in place 5 years ago might be stale and outdated now.
It’s also a good idea to have a system in place to make sure that only certain qualified employees have the authority to execute contracts. While this will not entirely ensure that your contracts are all solid, working with an attorney to check the final draft of every contract, as well as the base language upon which the final contract was built, will help to make sure that nothing is slipping through the cracks—leaving you exposed to legal danger.
2. Tax compliance
As we mentioned above, complying with all state and federal tax laws is essential to the integrity of your business. Taxes are regularly checked by the IRS and grow more complicated the bigger your business gets. From making sure all revenue is properly allocated and expenses are correctly categorized, to ensuring each and every form is fully and properly filled out from year to year, there is a lot of room for error.
3. Federal and state rule compliance
Depending on the type of entity your business is, there will be different types of corporate laws and rules at both the state and federal levels that you will have to comply with at all times. Unfortunately, it’s very easy to miss a new code or standard from year to year, so make sure to include a compliance check in your legal audit.
4. Intellectual Property
A company’s intellectual property is its most valuable asset. From its logo to the product or services themselves, making sure that no one is ripping you off and hurting your brand’s integrity is of the utmost importance. An essential component of the legal audit, intellectual property monitoring and review can be done by a business and IP attorney to make sure everything is not only properly set up, but also adequately protected.
Contact Integrated General Counsel today
Staying on top of everything that is important to the integrity of your business involves a lot of work and can quickly get overwhelming. As a California business owner, you already have enough to worry about and shouldn’t have to be the one who stays on top of every little thing. At IGC, we know what it takes to keep a business running smoothly and want to help keep yours in its best shape. If you own a business and want to make sure it’s as healthy as can be, contact IGC today to discuss your options for a legal audit today!
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