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5 Key Legal Items Companies Should Address Before Year-End

As we near the end of 2024, it’s essential for businesses to ensure their legal compliance and readiness for 2025. Here are five legal areas to focus on to protect your company and start the new year on solid ground.

  1. Corporate Transparency Act Compliance by January 1, 2025: Avoid a $500/day penalty

The Corporate Transparency Act (CTA) is set to impact a wide range of businesses in the new year. The deadline for CTA compliance is January 1, 2025. Most business owners with corporations or LLCs need to report beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN). If your business falls under the CTA’s requirements, you must file a report disclosing the identities of individuals with significant ownership or control over your company. Penalties for non-compliance are $500/day.

If you established your entity in 2024, your filing may already be late. The deadline for entities setup in 2024 is 90 days from the date the entity was established. Check on your reporting status and get your report filed as soon as possible.

  1. Conduct a Corporate Compliance Legal Check-Up

Annual corporate compliance is essential to maintain your business’s legal standing and avoid fines. Review your corporate records to ensure compliance with California state law. This includes verifying that the shareholders have been issued stock, holding annual meetings, ensuring annual meeting minutes are recorded, and confirming that the officers and directors of the corporation are correctly documented and reported. Additionally, each corporation must file its statement of information annually. Failing to keep these records current can expose your company to penalties, threaten its legal standing, and even risk the veil of liability protection for its owners.

  1. Conduct a Legal Audit of Your Contracts and Vendor Agreements

Legal issues often arise from outdated or ambiguous contract terms. Perform a legal audit of your contracts with vendors, clients, and partners to confirm that terms are current and favorable to your business. Ensure that indemnity clauses, liability limits, and termination terms align with your risk tolerance and business interests. If you’ve recently entered new business relationships, make sure these are formalized in writing, and consider revisiting the terms of long-standing contracts to negotiate adjustments if needed.

  1. Review Intellectual Property Protections

Intellectual property (IP) is a critical asset for many businesses, yet it’s often overlooked during routine legal checks. Review your IP portfolio, including trademarks, patents, copyrights, and trade secrets, to confirm your protections are up-to-date. For any trademarks, ensure you’re actively using them in commerce to avoid abandonment. If you’ve developed new products, processes, or branding, consider filing for trademark or patent protection. Staying proactive in this area can help safeguard your competitive edge and prevent potential infringements.

  1. Evaluate Data Privacy and Cybersecurity Compliance

Data breaches are often the most disruptive and expensive issue that a company faces. Review your data storage, retention, and security policies, and conduct a cybersecurity assessment to identify and address vulnerabilities. Additionally, as data privacy laws are growing more stringent each year, it’s crucial to ensure your business is fully compliant with relevant data protection regulations. If your business collects or processes personal data, verify that your data handling practices comply with laws such as the California Consumer Privacy Act (CCPA) or the European Union’s General Data Protection Regulation (GDPR), as applicable. As part of your annual review, update your privacy policy and cybersecurity protocols to reflect any new standards or laws.

Proactively addressing these five legal areas can help mitigate risks, ensure compliance, and will position your company to succeed and stay legally protected in 2025.

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