Navigating 2024: Morrison Cooper LLP's Legal Business Checklist

By: Keith Cooper and Katayoon Iravani
January 12, 2024

As we step into a new year, Morrison Cooper LLP is committed to providing proactive legal guidance to empower businesses for success. Accordingly, we present the 2024 Annual Legal Business Checklist, which is a comprehensive guide designed to help organizations navigate the evolving legal landscape and ensure compliance with key regulations. This includes some urgent legal compliance requirements.

1. FinCen BOI Filing: Please ensure that you complete the FinCEN BOI filing as soon as possible. Reporting companies created or registered before January 1, 2024, will continue to have until January 1, 2025, to file their initial BOI reports with FinCEN, and reporting companies created or registered on or after January 1, 2024, will have 90 calendar days to file. Companies who willfully provide false information (including a false or fraudulent identifying photograph or document) or neglect to report by the filing deadline can face civil BOI penalties of up to $500 each day that the violation continues or has not been remedied. In addition, they can be fined up to $10,000 and/or face up to 2 years of imprisonment.

In addition, FinCEN has recently been made aware of fraudulent attempts to obtain information from individuals and entities subject to reporting requirements. Please be vigilant and aware of any correspondence that may be titled "Important Compliance Notice." These fraudulent communications typically request recipients to click on a URL or scan a QR code. It is imperative to note that FinCEN does not send unsolicited requests for such information. We strongly advise you not to respond to these fraudulent messages, click on any links, or scan any QR codes contained within them.

2. Annual Filings: Ensure the information on your State Annual Report is current, file updated annual reports, and pay applicable taxes in your home state and any other states in which the Company is qualified and registered to do business as a foreign entity. As a note, the requirements and filing deadline for state annual report varies according to the state of organization and operation. This applies equally to corporations and limited liability companies.

3. Permits: It is important to check the requirements of all authorizations, tariffs, licenses, approvals and permits held by the Company from any local, state, U.S., or foreign governmental agency or authority, including any necessary renewals.

4. Annual Corporate Meeting Minutes (Corporations Only): Prepare and store in the Company’s Corporate Book all minutes or consents of the shareholders, directors, and any committees. This obligation extends to maintaining minutes of special meetings.

5. Intellectual Property: Review all U.S. and foreign trademark filings and registrations to check impending renewal or filing deadlines. Review all inventions, brands, and other things the Company has created in the past year to consider whether they are or should be protected by patents, trademarks, copyrights, and trade secrets. When applicable, ensure that all Company intellectual properties are subject of an agreement properly transferring ownership to the Company from the person or entity that created it, including yourself if you are the owner. Proper registrations are critical to ensure you can enforce your intellectual property rights. Additionally, for intellectual property licensed from or to third-parties, ensure proper written licensing agreements are in place.

6. Data Security: Ensure all personally identifiable data held or handled by the Company is subject to processes and procedures for maintaining data security, responding to user requests, and responding to a security breach that complies with applicable state, U.S. and foreign law.

7. Founder Agreements: Ensure the Company's founders have executed appropriate agreements governing their relationship to the company, including documents formally granting founders their equity interest in the company, whether on investing schedule or otherwise.

8. Employees and Independent Contractors: Ensure that every employee and independent contractor is a signatory to an agreement, that not only accurately describes the relationship with the Company, but also includes provisions granting ownership of all work product (including intellectual property) to the Company. These agreements should also restrain the worker from using or disclosing the Company's confidential information and prevent the worker from competing (excluding CA) with the Company during, and sometimes after, the term of the relationship. Review the Company’s Employee Handbook to ensure it conforms to current Company practices and interests. You must also ensure that the terms of the Employee Handbook are in compliance with state/local laws and are consistent with the terms of the employment or  independent contractor agreement, unless specifically stated otherwise.

9. Vendor Agreements: Review all agreements to keep track of termination windows and renewal procedures. Take care in formally terminating any agreements and SOWs with vendors that are complete, expired, or no longer relevant.

10. Customer Agreements: Review all terms of service, privacy policies, SaaS Agreements, EULAs, and customer agreements promulgated by the Company to confirm they continue to reflect the Company's actual practices and also remain legally up to date. For example, it is no longer conventional to insert licensing terms into SaaS Agreements. For non-form agreements, review to keep track of termination dates and renewal procedures, and take care to formally terminate any SOWs with customers that are complete, expired, or no longer relevant

11. Incentive Equity Plan: Commission an annual 409A Valuation to inform the option price and the Company’s Incentive Plan if the prior 409A Valuation is out of date. Ensure the appropriate amount of equities allocated to the Incentive Plan and that the terms of the grants, including vesting and exercise periods, are still appropriate.

12. Investor Relations: Ensure that documents are in place for any individuals or entities that have loaned money to or invested in your Company. This includes stock purchase agreements, member interest purchase agreements, convertible or promissory notes, and SAFEs/SAFTs.

13. Insurance: Do an insurance check, such as your renewal status and deadlines for all insurance coverage. We highly recommend procuring insurance for your specific business operations.

14. Accountants and Accounting: Ensure the Company’s books are properly maintained, including filing your state and federal taxes. We generally recommend retaining an accountant to assist you with these filings.

As we conclude this exploration of the 2024 Annual Legal Business Checklist, Morrison Cooper LLP remains dedicated to serving as your trusted legal partner in the dynamic landscape of business. By diligently addressing the crucial elements outlined in this checklist, organizations can proactively enhance their legal resilience and foster a foundation for sustainable growth. Our commitment to providing strategic legal guidance extends beyond this checklist, and we encourage businesses to reach out for personalized consultations tailored to their unique needs.