This time of year is a rite of passage for any student and parent, but it also signals that we’ve entered the home stretch of the year. We want to make sure that small businesses end the year with success! That’s why we put together a back-to-school legal checklist for entrepreneurs. Instead of hitting the books this fall, small business owners should take the time to make sure their legal and administrative obligations are in order.
The Legal Checklist for Entrepreneurs
1. Incorporate or Change your Business Structure
Many small businesses start out as a sole proprietorship or a partnership, but then eventually transition to another entity. Form an LLC or corporation to protect your personal assets from any liabilities of the company. CorpNet’s newly launched Business Structure Wizard can help entrepreneurs understand the differences between business structures.
2. 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!
3. 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.
4. Close an Inactive Business
If you have an inactive business, you need to file a formal termination of that LLC or Corporation by filing Articles of Dissolution with your secretary of state’s office in which you originally formed your corporation or LLC. Otherwise, you will be charged fees associated with the business, you’ll still be expected to file an annual report, and you’ll still need to submit tax returns to the IRS and state. Call CorpNet today and we can assist you with all the paperwork to properly close your business.
5. Hold your Annual Meeting for your Corporation or LLC
If you’re running your business as an S Corporation or C Corporation, any time you hold a corporate meeting, you’ll need to record minutes from the meeting. Your corporate minutes should capture details such as time and place of meeting, who attended, who served as chair of the meeting, actions and decisions made, and signature of the person recording the minutes (and the date the minutes were issued). Tip: To simplify preparing your minutes, consider using a meeting minutes template. It’s far easier than doing it all from scratch! If you haven’t done so already, hold your annual meeting for your Corporation or LLC. Along with the meeting, you’ll need to generate written minutes/resolutions to be signed by the shareholders of the (Corporation) or members of the (LLC). CorpNet.com offers free meeting minute templates or we can actually prepare customized minutes for your review and execution.
6. File “Articles of Amendment” for any changes
If you changed your company name or business address, have had members of your Board of Directors come or go, or authorized for more shares of your corporation to be sold, you must officially notify your state. You do this through an “Articles of Amendment,” and my team at CorpNet can help you process and file this documentation.
7. Pay Your Taxes and Keep up with estimated tax payments
The next estimated tax due date is September 15. You should review what your business has made year to date and assess your estimated tax payments to avoid underpayments or overpayments. 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.
8. Check if your business needs a Fictitious Business Name or DBA
If conducting business under a different name from your LLC or corporation, you’ll need to file for a fictitious name, also known as a “trade name,” “assumed name,” or “DBA” (Doing Business As). A DBA makes it legal for you to use that fictitious name when expanding into a new area of business focus or operate another business or website that wouldn’t be well-represented by your current name.
9. Renew business licenses and permits
If your business needs certain federal, state, county, or local licenses and permits to legally operate, you may need to renew them. CorpNet can help keep you on top of your renewals, so you don’t overlook this mandatory business compliance requirement. We cover all business licenses, permits and tax registrations for all locations in the United States.
10. Don’t commingle business and personal finances
Avoid shades of gray with your finances. Maintain separate checking and credit card accounts for your business, so your revenue and expenses are distinguishable from your personal monies and transactions. I can’t emphasize how important this simple step is for compliance purposes—and for making tax-filing time less taxing.
11. Register your business in each state you conduct business
To legally conduct business in a state besides the state where you formed your LLC or corporation, you will need to get authorization. This typically means qualifying as a “foreign corporation” or LLC within the state you intend to do business in. The form to do that might be called a “Statement and Designation by Foreign Corporation” (as in California) or known by some other name. Typically, you’ll need to file that documentation with the state’s Secretary of State office. And, as in your home state, you may need to apply for specific licenses and permits, too. At CorpNet, we handle business registrations in every state, so no matter where you plan to expand, we’re here to facilitate the foreign qualification process.