The Cheapest Sale Prep You’ll Ever Do: A Year-End Legal Checklist for Business Owners

Gaps in your records can cost you time or negotiating leverage. Some of them may take only an afternoon to fix in December.

TL;DR: When you sell your business, the buyer’s lawyers will go through your records line by line. Gaps they find can become a price cut, a delay, or money held back at closing. Some gaps may take only an hour or two to fix now. Below is the year-end list we’d work through first, plus the wage changes that start January 1.

Why December matters

Buyers don’t just pay for a business. They pay for a business they can verify. When records are missing or messy, a buyer may protect itself in one of three ways:

• By lowering the price
• By holding back part of the payment until problems are resolved
• Or by slowing the deal down while its lawyers dig.

We see the same handful of gaps again and again: ownership that was promised but never written down, workers paid as contractors who look like employees, a license held in the owner’s personal name, and key customer contracts that can’t be transferred without the customer’s consent.

These can be easier to fix when nobody’s waiting on you. All of them can become expensive to fix with a buyer watching. That’s why we think year-end cleanup is the cheapest sale preparation you’ll ever do, even if a sale is years away.

1. Ownership and company records

• Hold your annual meeting, or sign the paperwork instead where permitted. If your business is a corporation, your state generally expects a yearly shareholders’ meeting to elect directors. A signed written consent may work in its place, depending on state law and your company’s governing documents. If you’re an LLC, check what your operating agreement requires.
• Write down what was promised. If you told a family member or key employee they’d own part of the business, make sure it’s on paper and properly approved. Ownership that “everyone knows about” but nobody signed may be one of the first things a buyer questions.
• Keep the record book current. Major decisions from this year, such as loans, large purchases, and new leases, should show up as approved where approval is required.

2. Your workers

• Review who you treat as a contractor. If someone works set hours, uses your trucks and tools, and does the core work of your business, they may qualify as an employee under state law, whatever their contract says. California’s test is especially strict: where it applies, it generally treats a worker as an employee unless the business can prove otherwise.
• Don’t count on federal changes. The U.S. Department of Labor proposed a more business-friendly contractor test in February 2026. Even if it becomes final, it won’t change your state’s test, and state rules are usually the ones that bite.
• Update pay for January 1. Several changes are already set:
  • California: minimum wage rises to $17.40 an hour. For the standard white-collar exemptions, salaried employees generally must earn at least $72,384 a year and meet the other exemption requirements.
  • Washington: minimum wage rises to $17.73 an hour. The overtime-exempt salary rises to $92,196 a year for employers with more than 50 workers, and $82,976.40 for smaller ones. Other exemption requirements also apply.
  • Connecticut: general contractors may become responsible for their subcontractors’ unpaid wages on construction contracts entered into on or after January 1, 2027.
  • Illinois: covered employers generally must offer reasonable accommodations for menopause-related conditions, as they already do for pregnancy, such as flexible schedules or a cooler workspace. Check whether workplace notices and employee handbooks need updating to match.
• Check each state where you have staff. Other states and some cities set their own 2027 rates this fall.

3. Licenses, contracts, and leases

• Find out who holds your license. In many trades, the business’s contractor license depends on one qualifying person, often the owner. If that person leaves or retires, the business may need a replacement qualifier to keep its license active. Know who your qualifier is, and when the license and any bonds renew.
• List the contracts a buyer will care about. Pull your top customer and supplier contracts. For each, note whether it can be transferred to a new owner, or whether the customer can walk away if ownership changes.
• Check your leases. That means vehicle and equipment leases, financing agreements, and your property lease. Note which ones carry your personal guarantee and which need the landlord’s or lender’s consent to transfer.
• Consider moving business assets into the business. Trucks, equipment, domain names, trademarks, or phone numbers registered in your personal name can complicate a sale. Check the legal and tax implications before transferring them.

4. Insurance renewals

Many business insurance policies renew in the first quarter of the year. The underwriters will ask about claims, lawsuits, employee complaints, and data incidents, which is much of what a buyer’s team asks first. Organize the answers once and use them twice.

If your company has investors or stock options

• Valuation: Before granting stock options, make sure the company’s independent valuation (a “409A”) is generally no more than 12 months old and reflects any big change since, such as a funding round or a large contract.
• Paperwork: Check that each grant has the required approvals and documentation and matches your ownership records (cap table).
• Limits: Check how the $100,000 annual limit on incentive stock option treatment applies to your grants. If you’re relying on Rule 701, the federal exemption used for certain employee equity issuances, check the $10 million disclosure threshold and how it is calculated. Above that threshold, extra disclosures are required.
• Restricted stock: Anyone who received restricted stock this year may have benefited from a tax election (an “83(b)”). If making the election, the filing deadline is generally 30 days after the transfer. IRS Form 15620 can be used; confirm the filing method.
• Fundraising filings: If you raised money in 2026, confirm whether a federal Form D was required and, if so, filed within 15 days of the first sale, along with any state filings.
• Delaware tax: For Delaware domestic corporations, the franchise tax report is generally due March 1. The state’s default calculation can produce a very large bill. The alternative method is often cheaper, but you must choose it.

Your year-end list

• Annual meeting or written consent done; this year’s major decisions approved
• Promised ownership written down and approved
• Contractors reviewed against your state’s test
• Pay and handbooks reviewed for applicable January 1 changes in every state where you have staff
• License qualifier, renewal dates, and bonds confirmed
• Top customer and supplier contracts checked for transfer and change-of-ownership terms
• Leases and personal guarantees listed
• Business assets held in the business’s name where appropriate
• Insurance renewal answers prepared, ready to reuse

Where to start this week

Block one hour. Pull three things: your ownership records, your ten largest contracts, and a list of everyone you pay as a contractor. Then forward this to your bookkeeper or office manager, since most of the list runs through them.

The work pays off even if you never sell. Clean records can make your business easier to insure, to borrow against, and to hand to the next generation. And it’s far easier to do in a quiet December, on your own schedule, than under a buyer’s deadline.

If working through the list raises a question about your business, reply to this email and tell us what came up. We’re glad to point you in the right direction.

CGL LLP · Los Angeles, California · Attorney Advertising

This newsletter is general information from CGL LLP, current as of November 5, 2026. It is not legal or tax advice, and reading or replying to it does not create an attorney-client relationship.

• Corporate Governance
• Corporate Insights
• Employment Law
• Startup Advice
• Weekly Briefs