For Florida’s small and mid-sized businesses (SMBs), legal compliance is not just about avoiding lawsuits, it is about building a foundation for sustainable growth. Whether your company is expanding, facing staffing changes, or preparing for a major deal, periodic legal risk assessments are wise. Legal protections should evolve with your business. Overlooking even one key area—like a missing collections clause or an outdated employment policy—can leave your company exposed to regulatory fines, contract disputes, or costly litigation.
This Legal Risk Readiness Checklist outlines six core areas every SMB should review to protect operations, reduce liability, and stay aligned with Florida law.
- Corporate Formation and Governance
Proper entity formation and governance form the legal foundation of your business, affecting liability protection, capital raising, and contract enforcement.
Businesses must ensure:
- Articles of Incorporation meet Florida statutory requirements, including registered agent designation and capital stock disclosures.
- Governance documents (bylaws, shareholder agreements, operating agreements) are up to date.
- Annual meetings and records are maintained per statutory guidelines.
- The company remains in good standing with the Florida Department of State.
Incorporators are responsible for submitting formation documents and ensuring accuracy. Failure to maintain these formalities can jeopardize limited liability protections and impact the company’s legal standing. Double-check that the Articles of Incorporation include all required elements under Florida Statutes 607, including:
- the corporate name (with an appropriate identifier like “Inc.” or “Corp.”);
- principal office address;
- number and classification of authorized shares;
- registered agent designation; and
- the name and address of each incorporator.
Our article Checklist of What to Include in Your Florida Articles of Incorporation examines this in-depth.
- Contract Review and Compliance
Contracts are the foundation of business relationships with customers, suppliers, contractors, and employees. Reviewing your company’s contracting processes ensures clarity, accountability, and legal enforceability. To reduce exposure:
- Define Clear and Enforceable Terms: Ensure work scope, payment terms, schedules, termination rights, renewal provisions, dispute resolution, and confidentiality clauses are enforceable.
- Include Collections Clauses: Add attorney’s fees, interest provisions (up to Florida’s 18% cap), and exclusive venue provisions to protect your business if a dispute arises.
- Standardize and Centralize: Use pre-approved templates and store all contracts centrally to ensure accessibility, facilitate audits and track performance.
- Assign Ownership: Define internal responsibility for contract oversight, renewal, and compliance.
- Conduct Periodic Reviews: Audit for regulatory compliance and performance.
- Automated Consent: For automated communications, obtain valid express written consent under the Telephone Consumer Protection Act (TCPA) and the Florida Telephone Solicitation Act (FTSA).
3. Employment Law Practices
People’s decisions—who you hire, how you pay them, and how you let them go—are a source of legal risk for businesses. Proactively managing employment law compliance protects both the company and its workforce. Focus on:
- Hiring and Classification: Avoid misclassifying employees and contractors. Ensure all job postings and interviews are legally compliant with consistent practices.
- Written Policies: Maintain updated handbooks, job descriptions, and documentation of disciplinary actions.
- Structured Offboarding: Follow a termination checklist covering documentation, payroll, benefits notifications, access/security removal, and post-exit follow-up.
- Restrictive Covenants: Ensure non-compete and non-solicit clauses are standalone and enforceable regardless of compensation disputes.
- Training: Regular training on harassment, wage compliance, and workplace safety.
4. Data Privacy and Security Protocols
Whether you store personal client data or use software platforms for marketing or other business functions, Florida businesses must safeguard sensitive information. Data breaches and noncompliance with privacy laws can result in fines, litigation, and reputational harm. Whether serving consumers or businesses, all companies handling data must address:
- Data Security: Limit access to sensitive information and develop an incident response plan.
- Consent Management: Ensure marketing or automated messaging complies with TCPA/FTSA. Consent must be unambiguous, linked to your company, and verifiable. (See our article: TCPA and FTSA Consent Checklist for more).
- Recordkeeping: Maintain auditable records of consent and consent withdrawal procedures.
5. Vendor and Third-Party Risk Management
Vendors, suppliers, and third-party service providers often operate behind the scenes—but their failures can become your liability. Mitigating third-party risk involves clear agreements, documentation, and consistent oversight. Key measures to reduce risk include:
- Careful Selection and Due Diligence: Vet vendors for financial stability, regulatory compliance, and cybersecurity posture. Use background checks and structured onboarding processes.
- Written Agreements: Establish contracts that clearly define scope of work, performance metrics, payment terms, and penalties for non-compliance. Include indemnification, limitation of liability, and dispute resolution clauses.
- Performance Monitoring: Set and track key performance indicators (KPIs) for service delivery, quality, and compliance. Conduct regular performance reviews and audits.
- Compliance and Documentation: Maintain vendor compliance documentation, including nondisclosure agreements (NDAs), service level agreements (SLAs), and required certifications. Use vendor management systems (VMS) to centralize records and automate reminders.
- Risk Mitigation Planning: Proactively identify and address operational, financial, and reputational risks. Develop corrective action plans for underperformance or noncompliance.
- Relationship Management: Maintain strong vendor communication, provide feedback loops, and solicit input for continuous improvement.
6. Financial Protections and Collections Readiness
Cash flow is the lifeblood of any business, and effective collections strategies begin long before an account becomes overdue. To ensure your business is ready:
- Review Payment Terms: Clarify due dates, penalties, and interest.
- Preserve Lien Rights: In industries like construction, timely lien filings are essential.
- Comply with Collection Laws: Follow the Fair Debt Collection Practices Act (FDCPA) guidelines on timing, communication limits, and dispute resolution.
- Assert Setoff Rights: If the business owes and is owed money by a party in bankruptcy, seek court approval to apply setoffs.
- Document Everything: Maintain detailed records of all communications, payments, and account reconciliations.
If a customer files for bankruptcy, vendors must:
- Immediately halt collection activity to comply with the automatic stay.
- File a notice of appearance, determine the bankruptcy type (Chapter 7 or 11), and gather all contracts and personal guarantees.
- Assert claims: File proofs of claim and assert reclamation rights either within 45 days of the debtor receiving the goods, or within 20 days after the bankruptcy petition date if the customer filed for bankruptcy within that 45-day period.
- Protect your position: Monitor for motions to sell assets or grant superpriority liens that may impair your recovery.
- Review executory contracts and seek assurance or cure of defaults before the debtor continues performance.
See our article: Vendor’s Checklist When a Customer Files for Bankruptcy for a comprehensive list of protective steps.
Conclusion
Legal compliance is not a one-time task. Annual legal risk assessments and periodic reviews during leadership changes, growth initiatives, or new lines of business will help protect your company’s foundation.A proactive compliance strategy can prevent litigation, preserve resources, and position your company for future opportunities. For help conducting a legal risk assessment tailored to your business, contact the attorneys at Jimerson Birr today.