So you want to change your business structure from a sole proprietorship to an LLC or a corporation? Great! But you might be wondering if you should make it effective now, or wait to file your paperwork until the New Year.
If you’re one of those hyper-organized people, like me, you probably love the idea of having a neat and tidy January 1 effective date. After all, who wants to deal with filing two sets of tax forms—one for the period of time in this year when you operated as a sole proprietor and another for the part of the year the new structure was in place? But at the same time, I’ll bet you want to have all your ducks in a row right now, so you don’t risk filing too late and facing the same situation next year.
Sigh. What’s an entrepreneur to do?
Delayed Filing To The Rescue
Guess what? Most states offer a Delayed Filing option. It provides you a way to perfectly time the effective date of when your business officially changes to your new structure of choice.
Delayed Filing enables you to submit your application for whichever business structure you’ve chosen, but delay the actual incorporation date until a specific date in the future. In short, it lets you control your effective date of incorporation or LLC formation.
Whether you want to make a clean break with a January 1 start date or you have reason to schedule your new structure to take effect on some other date next year, you can get the paperwork out of the way now. That leaves you with one less task to take care when you need to be focused on marketing strategy, customer service, and all else.
When To Submit Your Delayed Filing
You can use the Delayed Filing option at any time of the year. Check with your state to find out how far in advance you need to file. The requirements vary from state to state. Typically, you would need to file between 30 to 90 days before your requested effective date.
What To Do
When filling out the online forms to form an LLC or incorporate, indicate the number of days after filing that you want your business structure to be effective. When registering your business structure for a delayed start date, your Articles of Incorporation (or Articles of Organization) will need to reflect that effective date, as well.
Final Words of Insight
Even though the end of the year is near, you still have time to submit a delayed filing for January 1, 2017. You will, however, need to use the fast track service to expedite review and approval by your Secretary of State department in time for your intended start date.
Worried you won’t be able to handle the filing details with the busy holiday season upon you? Contact us! We’ll be happy to help you file your paperwork now, so you can get right down to business in the New Year.