Anytime we hear the word “audit,” we automatically think of something negative, such as an IRS audit. However, a legal audit can be very beneficial for your business. Legal audits can save your company money and avoid future legal problems. Our South Carolina business attorney can perform a legal audit of your company and help you develop a strategy to address any problems that the audit reveals.
What Is a Legal Audit?
A legal audit is a routine “health” checkup for your company. Generally, an experienced business law attorney performs legal audits. An attorney reviews various aspects of your business to assess the risk and potential for legal problems. A legal audit can identify issues with your company’s structure, management, policies, procedures, and daily operations that could lead to compliance problems and lawsuits.
Staying on top of everything can be difficult, especially when a company grows very quickly. The owner is busy with the daily operations of the business and may be more inclined to pay attention to the financial health of the company instead of its legal health. Having a business lawyer perform a legal audit ensures that your company is legally “healthy” in addition to being financially successful.
Think of a legal audit as preventive measures to protect your business by minimizing legal risks.
What Is Covered by a Legal Audit?
The items covered by a legal audit depend on the type of company being audited and the type of service or product the company provides. However, there are some standard issues and items that most legal audits include.
A checklist of some issues a legal audit should review include:
- Protection of Personal Assets — Do you have a company structure and entity that limits personal liability for the owners? Do you maintain your business entity properly to avoid personal liability for company debts and obligations?
- Contracts — Are you using standard contracts that limit the company’s risk and protect the company’s best interest? Do you have contracts related to all aspects of your business? Are your contracts outdated? Do your contracts have the correct language required by current laws that make the contracts legally enforceable?
- Employee Matters — Does your company have a comprehensive employee handbook? Do your policies and procedures comply with federal and state employment and discrimination laws?
- Tax Compliance — Are you in compliance with local, state, and federal tax laws, including sales, employment, and corporate taxes?
- Intellectual Property and Trade Secrets — Do you have the necessary copyrights and trademarks to protect intellectual property? Do you use nondisclosure agreements in each situation in which trade secrets might be disclosed?
- Recordkeeping — Are your recordkeeping policies sufficient to protect yourself and the company if you are audited by a tax authority, named in a lawsuit, or investigated for compliance issues? Do you maintain accurate books and records and have redundant backups?
- Customer Data Protection — Do your policies and procedures for protecting customer data and information comply with state, federal, and international privacy laws? Are there safeguards in place to prevent data from being shared, leaked, or hacked?
- Compliance — Do you have any compliance issues? Does your company have the required permits and licenses? Are you complying with all federal and state regulations required for your specific enterprise?
The above checklist is not intended to be an exhaustive checklist for a legal audit. You should work with an attorney to determine the items that need to be included in your legal audit to protect your company.
Contact a South Carolina Business Attorney for More Information
If you have questions about a legal audit or want to schedule a legal audit for your company, contact Willcox, Buyck & Williams, PA to discuss this important legal checkup in greater detail.