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When it comes to the end of the year, most people are scrambling around to finish the very last bits of holiday shopping and making sure that everyone in their family is covered with a gift. However, for business owners and entrepreneurs, there is another equally important list that they need to also pay attention to – a corporate compliance checklist. In order to stay in good standing with whichever state they operate out of, a business is required to fulfill all of their obligations. By not doing this, businesses run the risk of being fined, facing severe penalties, and in the very worst case scenario, suspended or dissolved altogether. Not any of these outcomes would bring in the new year in the right way.
The responsibilities that businesses have depend entirely on what the business does, its structure, the location, plus several other factors. Below we will share some of the requirements that an entrepreneur might have to complete in order to stay compliant with state laws. However, this is no more than a sampling of items and so any business owner ought to seriously consider speaking with a tax advisor and an attorney for specialist professional help regarding their obligations.
Host An Annual Meeting
Most states in America make it a requirement that businesses must host a yearly meeting with all of their shareholders, keeping the minutes from these. In some certain states, LLCs are even required to hold these such meetings. For any business that does not and has not in the past held annual meetings with its shareholders, should start doing so immediately and before the end of the year.
Close Down Inactive Businesses
When it comes to closing down a business it is not enough to simply cease selling your services / products. A corporation or an LLC must actually submit a Certificate of Termination or an Articles of Dissolution document with the state. If it is a partnership, a dissolution form may also need to be filed with the state also. When shutting down a business, other tasks that are required include cancelling permits and licenses, and shutting any tax accounts that exist for it. Not officially notifying the necessary local, federal, and state agencies that a business is operating no more means that it would still be required to file reports and pay any fees and taxes that are appropriate.
Notify The State Of Changes
Where a business is officially registered as a corporation or an LLC, it is required to report any changes that it makes to specific areas to the state. These changes include things such as a change in name, a change in the registered agent, a change of address, a change in the shareholding structure, a change of owners, a change to people serving on the board of directors, and / or a change to the businesses’ organizational documents. In order to report any of these changes, a business owner must do so by filing an Article of Amendment to the state and pay the fees that come with doing this. Any changes that are made should always be submitted as quickly as possible in order to ensure that the state has an accurate and up to date record of the business. This will help to keep the business in a good standing and helps to protect the owner from facing any personal liability should any legal issues arise.
File An Annual Report
In America most states have it as a requirement that corporations and LLCs have to submit either on a yearly basis or every other year, an annual report. Business owners should check with the state that they operate out of as different ones have different schedules. An example of this is Pennsylvania requiring a report every ten years. It is vitally important that entrepreneurs know what the rules and deadlines are in their state. The due date of reports also vary from state to state with some requiring submission from the incorporation date, others at the end of the year, whilst some require it on the anniversary of the formation of the business or at the same time as when yearly tax statements are required. No matter when these are required, it is important that they are submitted on time in order to avoid having to pay any penalties or fees. Be sure to consider software options as well.
Change Entity Type
Although upon first setting up the structure of a business it might be perfectly fine and workable, over time and as the company develops, a business owner may find that a different type of entity is more appropriate. For instance, where an entrepreneur is registered as a sole proprietor but is now hiring staff and evolving their business, it may be beneficial to them, because of the tax flexibility and limited personal liability of an LLC, to change the structure of their business. With there being a number of tax and legal ramifications involved with switching business entities, entrepreneurs should be fully aware of both the cons as well as the pros. To help with making an informed decision, it can be beneficial to consult with a tax advisor and an attorney.
Review Payments For Tax
Those businesses out there that pay off their self employed tax contributions and estimated income throughout the course of the year may benefit by reviewing the tax payments, expenses, and revenue for the year to date. By doing this it can help them to determine whether or not they have overpaid or underpaid. What ever is the case, it is important for a business owner to then to talk with their accountant or with a tax advisor to see if it is wise to make an adjustment to any future tax payments that they make for the rest of the year.
Given how uncertain the business climate is currently, one thing that any business owner can actually control is compliance and by following the above list of requirements, there is no excuse not to do it correctly or on time.