When the calendar flips, it’s time for business owners to consider their resolutions for the new year. As the business landscape is constantly changing, every year brings a new round of challenges. That’s true for 2024, as well, so here are some tips from a Houston business attorney on a few important New Year’s resolutions for business owners to consider to ensure your company is in good shape heading into the new year.
Resolution 1: Prepare for the Corporate Transparency Act
The Corporate Transparency Act (CTA) will go into effect on January 1, 2024. Once in place, the CTA requires business owners to file a Beneficial Ownership Information (BOI) report to the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). Each BOI must include personal information about the company’s “beneficial owners” – people who have a direct or indirect ownership stake in the company. Anyone who owns at least 25 percent equity in the business or has a say in major operational decisions is considered a beneficial owner. The definition is broad and open to interpretation.
Resolution 1.1: CTA Reporting Requirements for Small Businesses
All limited partnerships, LLCs and incorporated business entities formed in the U.S. must file a BOI, with few exceptions. Banks and tax-exempt entities are exempt. Large companies with more than 20 employees and at least $5 million in gross receipts are also exempt.
If your business is not exempt, it must file a BOI that includes the name(s), address(es), birthday(s) and ID number(s) of all beneficial owners. This information is also needed for the company’s “applicants.” These are the people inside your business responsible for filing the BOI. This includes the person directly filing the BOI, as well as anyone directing the filing.
Reporting companies may request a unique FinCEN ID number from the department and use this in lieu of a beneficial owner’s or company applicant’s information. This can expedite filing time and any changes to the BOI once it’s filed.
Companies formed prior to January 1, 2024 will have all of 2024 to file their BOI. That gives qualifying business owners time to sort out their information. Unfortunately, there is still some uncertainty regarding the filing process. Guidance in this area remains limited.
As of now, consider reaching out to a reputable business attorney to start planning and taking the right steps toward CTA compliance.
Resolution 2: Verify That the Business Insurance Still Provides Adequate Protection
The beginning of the year is a good time for small business owners to review their insurance. Many policies expire at the start of the year and many businesses plan their fiscal year in January, so it’s a natural opportunity to identify and resolve any insurance needs.
If your company experienced significant growth in 2023 and acquired new employees, real estate or equipment, your current insurance coverage may not be sufficient. Put together an inventory of the company’s assets, determine their value, and verify that the items in question are covered by your current policies. If your coverage is insufficient, expanding your policy will protect from potential liability.
This extends to the type of insurance coverage your business currently has in place. For example, if your company has a vehicle titled by the business, you’ll need a business auto policy – not a personal policy – to easily file a claim.
Cyber liability policies are also growing in popularity. Cyberattacks can halt a company’s operations and expose sensitive customer information. Small businesses are particularly at risk according to a study by the Ponemon Institute. The study found that nearly 60 percent of small businesses have experienced a data breach after being targeted for a cyberattack. A cyber liability policy would provide some financial protection in this case.
Resolution 3: Assess the Company’s 2023 Performance and 2024 Goals
Did your organization hit its business goals in 2023? If so, what did it do right to meet those goals? If not, what changes can be made to ensure success in 2024?
These are easy questions to ask, but you’ll need an in-depth performance review to answer them. Did your sales meet your company’s goals? Did excessive overhead undercut your revenue? Where can costs be trimmed to balance out your budget? Are there products or services your business could add to its portfolio? Are there products or services that could be eliminated for cost efficiency reasons?
Look at your customers and determine which ones were the most (and least) profitable to deal with. This can help your business identify what an “ideal” customer looks like, giving your team an idea of where the best opportunities are.
In short, determine what your organization should do and should stop doing to improve its profitability.
Resolution 4: Update Your Business Plan
Business plans are a living part of your organizational strategy. Business plans are essential for business preparation and formation, but they remain relevant even after your company opens its doors.
If it’s been a while since your business plan was updated, it’s time to give it another look, especially if you’re expecting to take on additional investors, pursue a business loan, or add to your ownership group. Your business plan is essential in determining the company’s value to outside parties.
Business plan analysis and evaluation is still recommended, even if major financing or ownership decisions aren’t imminent. Updating your plan with current financial information, competitor analysis, and productivity goals can set the right course for companies going into 2024.
Resolution 5: Update Your Marketing Plan
Your company’s marketing plan may be part of its business plan or placed in a separate document. In either case, marketing plans deserve their own review and update. The goal here is the same – identify and reinforce what works and pull back on what does not work.
Research shows that businesses weather economic ups and downs better if they remain invested in their marketing. Whether your current marketing strategies are providing ROI, that is another question. You won’t know for sure unless your marketing plan is given a close look. Determine which of your marketing initiatives provided the best return and allocate more of your resources in that direction. Cut back on the marketing processes that didn’t work out.
A Reputable Houston Business Attorney Can Help Business Owners Prepare for the New Year
2024 is almost here, which means it is time to assess your company’s direction. The above tips are a good start but be sure to keep your timelines in mind. It can take weeks to update a business plan, establish reporting procedures, or review insurance options.
Your Houston business attorney can help your business with all of the above. That includes providing important insight, pushing processes forward, communicating with outside parties and ensuring reporting accuracy. In this way, a trusted Houston attorney can keep your business on track with its New Year’s resolutions.
- Episode 322: Fiduciary Roles in Estate Planning and Probate - February 23, 2024
- Episode 321: Foreclosures & Automatic Stay - February 16, 2024
- Episode 320: Pet Trusts: Caring for a Pet After You Are Gone - February 9, 2024