3 Things Small Business Owners Don't Include in Their Year-End Planning, But Should

by JD Supra Perspectives

...successful businesses develop and hew to a long-term strategic plan that includes annual goals and how to reach them. The beginning of a new year is the best time to develop or revise that vision. - James Irving, Bean, Kinney & Korman, P.C.

When it comes to year-end planning, what's the one thing most small business owners don't do but should?

That's the question we put to attorneys writing on JD Supra, knowing that the diversity of insights would make for interesting reading (and good planning, for our small business readers!) Here's what we heard back - three things you should be doing as the year draws to a close, but probably are not:

1. Budgeting Specifically for IP Protection

From Kristin L. Murphy at Brooks Kushman: "In my experience, one thing that most small business owners overlook when it comes to year end planning is budgeting for intellectual property protection. Whether it is brand identity that should be protected via trademarks, or inventions that should be protected by patents, often companies do not take the time to allocate financial resources for this protection, instead just providing a lump sum for the 'legal budget.' For some routine items, outside intellectual property counsel can usually provide estimates, as well as help businesses plan for additional filings based on reasonable assumptions and available dollars to allocate to protecting the company’s innovation."

2. Brushing Up On Changes In Laws Affecting Employee Benefit Plans

From Isabella Lee, attorney in the Atlanta office of FordHarrison: "Small employers often are not aware of changes in laws affecting employee benefit plans that require plan amendments, or that plan amendments are ultimately the sponsoring employer’s responsibility (as opposed to a service provider that provides template plan documents). For example, for the first time this year, health flexible spending account plans can be amended to add a $500 carryover. This is a major change from the traditional 'use-it-or-lose it' rule. This carryover feature can be effective for the 2013 year, so long as plans are amended to remove any grace periods from the plan by December 31, 2013, and so long as the amendment providing for the carryover feature is adopted by December 31, 2014.

With respect to same-sex spouse benefits, the Supreme Court’s Windsor decision earlier this year declared the Defense of Marriage Act’s ('DOMA') definition of spouse as only applying to a marriage between a man and woman unconstitutional. Therefore, if any existing plan documents define 'spouse' with reference to DOMA, plan amendments reflecting a new spouse definition will be required."

3. Developing (and Revising!) Your Longterm Strategic Plan

From James Irving, shareholder at Bean, Kinney & Korman: "Small business owners often lose sight of the forest while focusing on the trees. Running a successful business requires time consuming day-to-day attention to fundamental business issues – employees and employment, generating new business and maintaining strong client relations - to name only three. However, successful businesses develop and hew to a long-term strategic plan that includes annual goals and how to reach them. The beginning of a new year is the best time to develop or revise that vision. Doing so makes it easier to stay on track during the new year and to measure success."

And a bonus item, a critical reminder of something often relegated to the bottom of the pile (until it is too late to act on it):

4. Revising Your Buy-Sell Agreement

From Peter Greenbaum at Wilentz, Goldman & Spitzer: "Year-end is an ideal time for business owners to dust off their buy-sell agreement. Often, buy-sell agreements call for an annual re-valuation of the business through a Certificate of Value. In other words, the business owners are to annually review the finances of the business and re-set the value of the business for buy-sell purposes. Unfortunately, this task is typically put at the bottom of the pile or, more likely, forgotten about. It is discovered only later upon the occurrence of a buy-sell trigger, and at such time, often the pre-determined value is too high or low. Alternatively, the buy-sell agreement may set the value based upon a formula or other methodology, which too may be irrelevant upon the occurrence of a buy-sell event. Thus, business owners should make it a habit to review their buy-sell agreement annually to confirm that the pre-determined buy-sell valuation or formula is still applicable. A quick annual review can save the owners a lot of future headaches."


Stay tuned for additional year-end planning posts in our Legal Perspectives series.


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