Every entrepreneur should consider these five recommendations as a means to make your business run as smoothly as possible and to stay up-to-date:
Get an employment contract written and start using it
There are dozens of reasons that every employer should get their employees to sign an employment contract before they start work. It is the route by which employers:
- define ahead of time what they will have to pay employees that they terminate;
- impose restrictions that stop employees from poaching your staff or clients
after they leave you;
- reserve rights that you may need to resort to later in the relationship; and
- set the parameters of the relationship in every way.
Failing to have a good solid contract of employment signed by all your employees will be very expensive and aggravating in the long run.
Every business that has ever retained us to defend them in litigation arising out of a termination where there was no employment contract has, immediately thereafter, hired us to prepare contracts and policies for their employees. In almost every case the cost of preparing the contract was significantly less than the cost they had to pay us to defend them in the lawsuit.
Get ahead on this one. Get the contract done BEFORE you get sued by an employee you have decided to terminate.
Make sure you are compliant with the Customer Service Standard of the AODA
AODA stands for Accessibility for Ontarians with Disabilities Act, and it relates to any business or organization, regardless of size, that either has employees and operations or customers in Ontario.
The act is made up of 5 standards, and the deadline for most private sector companies to be compliant with the first standard – the Customer Service standard – is January 1, 2012.
The consequences of not complying can be severe and unlike some other legislation, there will be an enforcement mechanism that doesn't require a complaint to be made. Every company that is guilty of an offence under this Act is subject to penalties of up to $100,000 per day that the offence occurs or continues to occur.
Besides the threat of penalty, there is a business case for doing this. There are over 1.5 million people living with disabilities in Ontario and as our population ages, more will fall into that category. That is a big market that you may draw to your business by promoting that you have a service that provides the basic accommodation that they need to access your services.
There are many resources available to help you with compliance, but you only have until the end of 2011 to comply with the first standard. There will be more coming shortly.
Get your insurance agent to explain the changes to your accident benefits coverage that happened in 2010 and buy whatever additional coverage will keep you and your family comfortable in the event you have an accident.
Some fairly significant changes have been made to the scale and scope of benefits you are entitled to receive as a result of injuries you sustain in a car accident. Some of them can be regained by paying additional premiums, but some of them cannot.
Entrepreneurs and business owners tend to have fewer benefits to fall back on in the event of an accident so it is VERY important for you and your family to understand EXACTLY what you will be entitled to in the event of an accident.
Have someone review your policy, and the changes that will be imposed on your benefits entitlement, before your next vehicle insurance renewal, so you can exercise the opportunity to purchase additional coverage if you may need it.
Make a will and create a proper succession plan for your business and personal assets.
Because most business owners are focused on the present - on their business activities and growth - many of them don't deal with succession issues or do proper estate planning. This can cause their families a lot of stress and aggravation and result in a significant amount of money that could have been preserved for the family with some pre-planning, going out in taxes. Some of the ways this can happen are:
- Your family may incur significantly more tax than if you had a proper tax- planned will. You are deemed to have disposed of all capital property at the time of your death, and your estate must cover the tax on any capital gains. Unless you have a surviving spouse named as beneficiary, your tax- sheltered plans (such as RRSPs and RRIFs) lose their tax-sheltered status upon death. Probate taxes which your estate must pay to the government to confirm the validity of your will can amount to thousands of dollars. Some careful planning can substantially reduce the probate fees and other taxes that your estate would otherwise pay. This is especially so if you own shares in a valuable private business at the time of your death.
- If you die without a will your estate will be distributed in a way specified by statute which in all likelihood will not be in accord with your wishes. You need a will to ensure your assets go to the right people.
- If you become mentally or physically incapacitated without having granted powers of attorney for property and for personal care, your family will have great difficulty managing your affairs and your business. A power of attorney lets you choose a trusted friend, family member, or advisor to manage your affairs in the event that you're no longer able to.
- There is no reason in the world you shouldn't take advantage of the legitimate means that are available for you to preserve your assets and the assets of your business, but it means you have to be proactive and get a will and proper powers of attorney prepared.
Be proactive about managing information your business creates and stores electronically.
It is now law in Ontario that in any lawsuit all parties have to produce all electronically stored information they have that is relevant to the case. That means anything stored on your computers, in your network, on laptops, mobile devices, memory sticks, discs, email accounts (including things like gmail, hotmail, etc.), social media sites (facebook, LinkedIn) etc.
As you can imagine, identifying, locating and collecting that kind of information is expensive and time consuming. And there are significant consequences if you don't do it properly and completely.
Historically, insurance coverage has paid the costs associated with producing documents and information in the course of lawsuits because it was an obligation that the parties were compelled by law to fulfill.
With the onset of the electronic environment however, the volume of relevant data being created on all of these fronts has dramatically increased the cost associated with the fulfillment of these legal obligations in the course of a lawsuit and insurance companies that insure businesses are having to find ways to offset those costs. Accordingly, they are more and more often demanding that their clients develop systems to control, manage, store, sort, identify and extract the electronically information created in the course of their business activities. In some cases, if clients don't have proper data management systems in place and the costs associated with production in the lawsuit are high, insurance companies have denied coverage claimed by businesses for the costs they have had to incur.
We have also seen an increase in premiums required on renewal for coverage where insurance companies aren't satisfied that company's have organized themselves so that they are properly equipped to handle the electronic document production required in litigation.
Do yourself and your business a favour and get some help developing a system for managing and accessing electronic documents created by your business BEFORE you have to do it in the face of a lawsuit.