Small Business
Legal Audit Checklist
1. Contracts
¨ yes ¨ no Are all of the company's important agreements in writing?
¨ yes ¨ no Are there good form contracts in place?
¨ yes ¨ no Do the contracts provide for disputes to be resolved in courts in the city where the company's principal office is located?
¨ yes ¨ no Is there an attorney's fees clause in each contract?
¨ yes ¨ no Does the contract say that amendments to the contract may only be made in writing?
¨ yes ¨ no Are there provisions in the company's standard form contracts regarding limiting the company's liability?
¨ yes ¨ no Is the company complying with the terms of its contracts and leases?
2. Corporate Minute Book
¨ yes ¨ no Do the Articles of Incorporation provide for sufficient authorized number of shares?
¨ yes ¨ no Is a copy of the Articles in the Minute Book?
¨ yes ¨ no Is a copy of the Bylaws in the Minute Book?
¨ yes ¨ no Are there minutes for all meetings of shareholders?
¨ yes ¨ no Are there minutes for all meetings of directors?
¨ yes ¨ no Are there minutes of annual shareholder meetings?
¨ yes ¨ no Are all written consents of shareholders and directors included?
3. Stock Matters
¨ yes ¨ no Has the company received the consideration for each sale of stock?
¨ yes ¨ no Is the Stock Ledger current?
¨ yes ¨ no Were all sales of stock made in compliance with applicable securities laws?
¨ yes ¨ no Did the Board of Directors properly authorize the sale of all stock?
¨ yes ¨ no If necessary, did the shareholders properly authorize the sale of stock?
¨ yes ¨ no Did the company receive the consideration for the issued stock?
¨ yes ¨ no Were stock certificates issued?
¨ yes ¨ no Did the stock certificates have appropriate legends?
4. Government Filings
¨ yes ¨ no Has the company obtained its Federal Employer ID number?
¨ yes ¨ no Has the company obtained its State Employer ID number?
¨ yes ¨ no Have any required local and state licenses and permits been obtained?
¨ yes ¨ no Has the company qualified to do business in all states it is required to?
¨ yes ¨ no Have all annual information statements been filed with the Secretary of State? (varies from state to state)
5. Intellectual Property Protection
¨ yes ¨ no Have trademark registrations been obtained for company products and services?
¨ yes ¨ no Is the "TM" or "SM" or "®" notice displayed properly on all company literature?
¨ yes ¨ no Is a proper copyright notice put on all company copyrightable materials?
¨ yes ¨ no Have patents been applied for company-owned inventions and discoveries?
¨ yes ¨ no Is a trade secret protection program appropriate?
¨ yes ¨ no Have employees signed appropriate Confidentiality and Invention Assignment Agreement?
¨ yes ¨ no Have consultants and independent contractors signed appropriate Confidentiality and Invention Assignment Agreements?
¨ yes ¨ no Is the company infringing the intellectual property rights of others?
¨ yes ¨ no Is there a program in place to determine if others are violating the company's intellectual property rights?
¨ yes ¨ no Are all needed licenses obtained?
¨ yes ¨ no Is the company complying with all license agreements to which it is a licensee?
6. Employment
¨ yes ¨ no Does the Company have an "at will" employment policy in place?
¨ yes ¨ no Do interviewers of prospective employees know what they can and can't ask?
¨ yes ¨ no Is there a Non-Discrimination Policy in place?
¨ yes ¨ no Is each prospective employee required to fill out a good form of Employment Application?
¨ yes ¨ no Are employees treated fairly and evenly?
¨ yes ¨ no Is there a Sexual Harassment Policy in place?
¨ yes ¨ no Are job offer letters to new employees carefully drafted?
¨ yes ¨ no Does the company have all needed forms from employees (W-2, I-9, etc.)?
7. Recordkeeping
¨ yes ¨ no Is the company keeping good records of its income and expenses?
¨ yes ¨ no Is the company keeping track of all of its contracts?
¨ yes ¨ no Is the company keeping track of all employee records?
¨ yes ¨ no Is the company keeping track of all tax filings required?
8. Laws. Has the company determined the applicability of the following laws to its business?
¨ yes ¨ no Environmental laws
¨ yes ¨ no Worker Safety laws
¨ yes ¨ no Securities laws
¨ yes ¨ no Consumer protection laws
¨ yes ¨ no Advertising laws
¨ yes ¨ no Employment laws
¨ yes ¨ no ERISA
¨ yes ¨ no Product liability laws
¨ yes ¨ no Corporate laws
¨ yes ¨ no Tax laws
¨ yes ¨ no Commercial and Real Property laws