While definitely not the most glamorous aspect of running a business, complying with applicable rules and regulations is a must. Business compliance (known as “corporate compliance” for incorporated businesses) is critical for keeping your company in good standing with your state.
The specifics of what you need to pay attention to depend on the legal structure of your company and where you’re registered to operate your business. The compliance requirements Limited Liability Companies(LLCs) and corporations have to meet can vary from state to state (and sometimes even from one municipality to another), so I recommend you contact CorpNet, your lawyer, and/or your accounting professional to make sure you understand what you need to do to stay compliant and avoid late fees and penalties.
Consequences Of Non-Compliance
One of the questions we hear from customers of CorpNet is, “What happens if I fail to meet requirements or don’t meet them on time?
For one, you risk piercing the corporate veil that protects your personal assets from liabilities of your business. If someone sues your LLC or corporation, your home, personal checking account, retirement savings, etc. could become vulnerable if a judgment is made against your business.
Additionally, your state might impose late fees and levy interest on payments that you owe on certain filings and renewals. Who needs that extra expense?
If you continue to neglect your business compliance obligations, the state might even dissolve your LLC or corporation—leaving you without the liability protection and potential tax benefits that they offer. Sigh. That’s a sad and potentially financially debilitating situation to find yourself in.
Your Small Business Compliance Checklist
As I mentioned earlier, your compliance requirements may be different from those of the business next door or in the state next door. But to give you a head start on thinking about what filings and paperwork you might need to submit, I’ve created the following handy checklist.
- Maintain a registered agent. What is a registered agent? Also sometimes called a “resident agent” or “agent for service of process,” a registered agent is an entity (individual or company) officially recognized by your state to accept service of process on behalf of your business. “Accepting service of process” means the registered agent will receive important paperwork (such as notices to file your annual report or legal notices in the event your business becomes involved in a lawsuit) on behalf of your LLC or corporation. By law, your business needs to have a registered agent as soon as you form an LLC or incorporate. Requirements vary from state to state, but usually, a registered agent must be a natural person resident of the state or an entity having a business office and authorization to do business in the state. Failure to secure a registered agent or pay your designated registered agent’s fees could result in the Secretary of State considering your business defunct. With CorpNet providing Registered Agent Services for all states, there’s no reason for your business not to comply with this very straightforward requirement!
- File annual reports. Many states require LLCs and corporations to submit an annual report either every year or every other year. Some states require it on a less frequent basis. To know what your state’s rules are, check with the Secretary of State office. Also, take note of the due date for filing your annual report. Your state might require it by the anniversary of your incorporation date, at the end of the calendar year, or when your annual tax statements are due. Plan ahead, so you’re not scrambling at the last minute. To save time and money when processing the documents required for filing your annual report, consider having CorpNet take care of the paperwork on your behalf.
- Pay your taxes. Don’t slip up by not paying the taxes applicable to your business (income taxes, sales tax, business taxes, or franchise taxes). You must pay them—and preferably on time—to keep your business in good standing.
