Every new year begins with promise. We tell ourselves this is the year it’s going to be different. This year we are going to finally do it. Maybe for you, it is:

• eating healthy
• exercising
• bookkeeping
• learning a new language
• traveling more

But unless you turn it into a habit, then it’s hard to change your pattern of behavior. (Pssst…my favorite book about habit forming is The Power of Habit by Charles Duhigg [affiliate link].)

And unlike me, you likely don’t have strong habits around performing a regular legal check-up of your creative business.

I know it sounds boring. But these legal tasks are critical in building a foundation to support your big goals for the year.

Is one of your big goals to:

• earn six-figures? Then the task of electing s-corp taxation might save you thousands of dollars in taxes come next April.
• your business support you full-time? Then the legal task of deciding if you should be an LLC or corporation can give you peace of mind and more sleep.
• hire a new employee? Then be a good boss and create an employee manual. In it outline her roles, responsibilities, and what you expect from her.

To help you form a new habit, this post is the first of four I’ll be doing this year. Each one outlines a set of quarterly legal tasks you should complete in your creative business that quarter.

To kick the year off, you are going to tackle between three and six quarterly legal tasks:

• make sure you’ve got your permit and license renewals on your calendar
• pay your taxes
• if you are a sole proprietor or in a partnership, decide if it’s time to become an LLC or corporation
• if you are an LLC or corporation, decide if it’s time to elect s-corp taxation
• if you are an LLC or corporation, document all major business decisions and hold any required meetings
• if you have employees, order updated employment posters
• if you have employees, update your employee manual

Once you’ve done each of these tasks, you’ll have taken a big step toward making sure your business has a solid legal foundation.

#1: Make sure you’ve got your permit and license renewals on your calendar

Your business should have permits or licenses and most of them need to be renewed from time to time. If you don’t renew them in time you may pay extra, or have to start the process all over. 

This is why, we are going to make sure all your permit and license renewals are added to your calendar.

For those with a renewal window, I usually schedule reminders for the following days:

• the day the renewal window opens
• the day the renewal window closes
• one month remaining to renew
• one week remaining to renew

For those that are due on a specific date, I usually schedule reminders for the following days:

• the day the renewal is due
• one month remaining to renew
• one week remaining to renew

To make it easy I schedule them in Asana as yearly repeating tasks. This means next year’s reminders are scheduled as soon as I check them off.

👉 Quarterly Legal Task #1: Find your permits and licenses and schedule reminder renewal to-dos so you don’t miss any deadlines.

#2: Pay your taxes

To make your annual tax time a little easier, each quarter you should pay your taxes. You might owe:

• estimated self-employment taxes to the IRS
• collected sales tax to your state tax agency
• employer’s taxes to the IRS and your state tax agency

👉 Quarterly Legal Task #2: Send checks to the appropriate agency (And if you don’t have a system to set aside the government’s money, I highly recommend Profit First by Mike Michalowicz [affiliate link].)

#3: Sole proprietorships + partnerships: decide if it’s time to become an LLC

If you are a sole proprietorship or in a partnership, once a year it is smart to check if it’s time to switch to another business type.

Becoming an LLC brings three big benefits to your business.

The first is that it puts a fence between your personal life and your business. If anything goes legally or financially wrong in one area, the other isn’t impacted.

The second is that this fence gives you peace of mind. You no longer have to worry about if your home, is at risk if someone decides to sue your business. You no longer have to worry that a business creditor can take money from your “money to support me while I grow my business” savings account.

The final benefit is that it changes your perspective and helps you level up your business. I’ve seen so many creative businesses explode in the year after becoming an LLC. And they all tell me that it’s because they took on a different perspective of their business. They no longer think of their businesses as one-woman shops. Instead, they are now CEOs of creative businesses.

👉 Quarterly Legal Task #3: Read this in-depth guide where I explain my secret to knowing it’s time to switch. It also explains why an LLC is usually better than a corporation. If you decide to make the switch, my book, LLC for your Creative Business will walk you through creating your LLC (and keeping it legit).

#4: LLCs and corporations: decide if it’s time to elect s-corp taxation

At a certain point, LLCs and corporations might want to be an s-corp for taxation purposes. s-corp status is a tax status only and either LLCs or corporations can make this election.

Business owners opt for this tax status because it can result in significant tax savings. Sadly, there’s not a one-size-fits-all formula for when this tax status makes sense. Your accountant or CPA is the only one qualified to help you make this decision. And to make it, she’ll look at your business revenue, your business expenses, and your income tax bracket.

The reason you should do this at the beginning of the year is because there’s a small window to make this election. To elect this tax status for the current tax year, you must file a form with the IRS no later than March 15.

👉 Quarterly Legal Task #4: Make an appointment with your accountant to discuss if this will result in lower taxes.

#5: LLCs and corporations: document all major business decisions and hold required meetings

The whole reason you created your LLC was for the three benefits discussed above. And to keep your fence strong, you are required to document all major business decisions.

This might seem silly as a one-person show, but it shows that you are treating your business like a business. It fortifies your fence.

To document your decisions, you don’t need to do anything fancy. It can be as simple as summarizing notes from a meeting or writing down what your plan is. (In legalese, these are called Minutes of a Meeting and Written Consents.)

#6: Employers: order updated employment posters

As an employer, you are required to display various posters and notices. The Department of Labor FirstStep Poster Advisor helps you identify the required federal posters. And to find the requirements in your state here is a state-by-state directory of the U.S. Labor Agencies.

And don’t think you have to shell out a bunch of money to do this. Many agencies provide PDF versions of the posters that you can download and print for free. (Or if you only have remote work employees, you just need to have an electronic hub for them.)

👉 Quarterly Legal Task #6: Update (or get) all the required posters for your business.

#7: Employers: update your employee manual

Part of being a good boss is providing tools and resources for your employees. And one of these things is an employee manual that explains:

• how to do their jobs safely
• the rules surrounding their employment
• any benefits you provide

Twice a year, you should update your employee manual. You’ll update it, based on situations that have come up or changes you have made to your business.

Maybe an employee forgot the social media password and changed it. And then when you tried to log in, you couldn’t. To make sure this doesn’t happen again, you’ll outline a system for updating and storing passwords.

Maybe you’ve decided to offer profit sharing to your employees. Because you believe this will incentivize good employees to stay or to reward their investment in building your dream. Since this is a new benefit, you need to outline to your employees how it will work. You’ll tell them how profit is calculated, how profit will be distributed, and what happens if they leave.

That’s a wrap on your Q1 quarterly legal tasks!

In January, there are between three and six legal tasks you should tackle to support your big goals for the year:

• make sure you’ve got your permit and license renewals on your calendar
• pay your taxes
• if you are a sole proprietor or in a partnership, decide if it’s time to become an LLC or corporation
• if you are an LLC or corporation, decide if it’s time to elect s-corp taxation
• if you are an LLC or corporation, document all major business decisions and hold any required meetings
• if you have employees, order updated employment posters
• if you have employees, update your employee manual

If any of these tasks seem too daunting, just set a timer for 20 minutes and see what you can get done. I bet you’ll be surprised how much you can accomplish in 20 minutes when you’re focused.

The best way to have a strong legal foundation is to consistently spend a few minutes each week shoring up your legal foundation. That’s why I launched a new Friday email series where I send you one bite-sized legal task each week. Sign up below to get your first task.