Strategic Business Concerns Checklist

Getting Started

Choosing an entity type (C or S Corporation, Proprietorship, LLC, LLP, Partnership, etc.) Do you adequately understand and have planned for how your business is to be taxed? Are adequate tax planning techniques/procedures being applied to mitigate your tax liability so that there are no unnecessary surprises, penalties and interest?
Understanding the tax effects…Are the tax and operational advantages adequately understood and contemplated? Is our present entity choice the best option for our existing business?
Selecting a fiscal year. Selecting officers and directors. Setting up a corporate account/obtaining a business license.

The Formative Stage

How is business organized? What is its state of domicile and determine if you should register in other states?
Have you set up adequate internal controls to protect and safeguard cash, assets and contracting ability?
Have you selected an initial and a backup bank and are you continually marketing to keep your banker informed? A well-advised banker is best apt to respond favorably when needed.
When/how much of a line of credit needs to be established and what are the procedures/timing to determine its adequacy? Has the line of credit maximum been evaluated with what the business model/plan would suggest?
How much insurance do we need (Directors and Officers, Errors and Omissions, Corporate Umbrella, Product Liability, Worker's Compensation, auto, contents, renters, building, business interruption, surety, fidelity, etc.)?

Corporate Taxes

Are all of the long term (S Elections/filing status) and annual elections (annual registration, business license, etc.) and filings being made both timely and properly?
Is proper tax planning in place and being maintained on an ongoing basis at least twice annually and for all substantive changes in operations?
Is everything being done that can possibly be done to keep the tax bill as low as legally possible? Do we routinely search for any missed deductions?

Pensions, Profit Sharing Plans and Benefits

When and how does the company plan to offer medical, dental, life, or disability insurance? Is there an adequate amount of coverage to both protect and plan for your staff's retirement and to retain a competitive edge in the marketplace to both attract and retain employees?
How/when does the company plan to set up a 401K, SEP/IRA, simplified IRA, pension, or a profit sharing plan? Are we seeking wise counsel in setting up a plan's parameters and aware of its filing requirements?
How/when does the company plan to set up a Section 125 or cafeteria plan/HSA (Medical Savings Account)?
Are we familiar/well advised with vesting rules/obligations, anti-discrimination rules, establishment of the plan document (SPD), and annual filing requirements of the pension plan you contemplate initiating/presently have.

Computerization

Do we have enough RAM & data storage memory to cover your business growth, as specified in our business plan? Are our computers data programs and operations adequately physically protected and safeguarded?
When will our present software package be technologically outgrown? Are plans for a new package being presently evaluated? What are our critical path components for data storage/numbers of users, etc and who is responsible for monitoring them and how often? Are we better served with an off the shelf or proprietary package?
Do we have off-site data storage and backup in both hardcopy and disk form? Is our data backed up daily and off site at least weekly? Larger firms should do off-site storage each day.
Are passwords and other appropriate levels of protection/firewalls, Spam control, current and operating adequately to safeguard all of our electronic data?

Shareholders/Officers

Who should we elect and what do they "bring to the table"? Do we understand the responsibilities and legalities of all parties nominated and are they qualified?
If an active shareholder quits, dies or is disabled, how does the shareholder agreement address the vacancy? Is this covered in our shareholders agreement?
How is the shareholder agreement structured? Is it adequate to protect the business future viability?
How much is the buyout or how is the purchase price to be determined? Is it fair and adequate? Are there realistic provisions made for the company to finance or fund a payout?

Marketing Strategy

What are the resources available and are they adequate for the task at hand/growth planned?
How big do we want to get? What does our business plan say? Are budgeted marketing efforts being consistently achieved and monitored?
How are we tracking new business leads and what is our strategy for keeping and retaining our present client base? Marketing statistics are the purveyor of future operational results and are critical to be adequately determined and tracked appropriate with corrective changes in marketing efforts being consistently made.

Financials

Do our financials properly reflect our business needs? Are we able to adequately track meaningful management information such as current assets to liabilities ratios, gross margins, days in receivables, etc?
Are appropriate percentages and ratios being examined? Are we tracking/working with our CPA to determine and track essential financial, operational, and narrative information?
Is the company under capitalized? Do we have enough cash to meet ongoing/expected needs for operations based upon past trends/projections and our business plan?
Do the financials properly reflect the operations of the business and do we understand their nuances? Is management taking the necessary corrections and monitoring their results adequately?

Internal Controls

Who is authorized and to what levels to access the company assets and proprietary data/records/methods and trade secrets? How is this controlled and documented? Is their adequate safeguarding of assets (i.e., are staff members who write checks different from those who prepare the bank reconciliation's and review the cancelled checks)?
In controlling cash, accounts receivable, accounts payable, inventory and fixed assets, are books and records, passwords, billing procedures, sequential numbering and accounting for invoices and checks properly maintained and controlled? Are assets physically protected and secured with keys/pass codes/tracking technology and video surveillance cameras?
Are assets properly safeguarded/locked during day and evening hours? Locked not only means under physical lock and key but adequately protected by limiting procedures and segregation of staff duties to maintain adequate separation of duties and internal control.
Are policies and procedures documented and are all appropriate personnel informed of the varying levels of safeguards, segregation of duties and appropriate monitoring maintained?

The Business Plan

Is it well written/adequate/up-to-date? Is the plan available to all key personnel? Do all employees understand and committed to your corporate mission? Do you have a standard/motto to live by?
Is your business plan updated periodically and monitored against actual results?
Are operating statistics and financial data appropriately measured and evaluated against the plan? Are we on track? Do we have an independent, non-biased, voice and business mentor to challenge our assumptions and decisions?
Is the business plan operation based and sufficient so that knowledgeable/key employees have adequate criteria and direction to manage and operate their segment of the business?
Does our banker have access to both the business plan and actual operating results? How often is this communicated? Is your banker told well in advance of any operational or financial variances? You will want your banker to positively respond when needed so be sure they are adequately prepped and informed.
What does our company stand for (company motto or mission statement)? Do all employees "buy into" the statement? Is our motto one of actual operational guidance or one of superficial quality? Is our motto customer centered?

Other Issues

Are we planning to acquire a new business or sell an operating segment of our present operations? Have we adequately evaluated if this acquisition is a good fit for our present business, as it exists, mode of operations and business culture?
Shareholder, employee, IRS and other regulatory agency disputes. Are we taking the adequate steps to ensure that procedures, business practices and checklists are in compliance with local, state and federal laws? If discrepancies occur are we seeking adequate representation and prudent counsel to both resolve and make corrective procedural changes?
Compensation Plans. Are our compensation plans competitive in the marketplace to attract personnel and effectively limit employee turnover? Do incentive/bonus/compensation plans effectively motivate employees to achieve qualitative and quantitative excellence?

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