Opting to create a limited liability company or corporation instead of sticking with a sole-proprietorship or partnership can be a smart move for business owners, as turning a compant into its own legal entity helps provide a bit of added legal and financial protection.
1. File an annual report
As LLCs and Corporations are their own, separate legal entity, it is up to you, as the owner, to keep the state up to date as to any changes that might have occurred.
Typically, that means filing an annual report detailing where your primary place of business is, where your registered agent is located, whom you count as members or directors of the business, and their addresses. Different states have different filing requirements, but they usually all ask for the same things.
Be sure to check with your secretary of state first – some states, like Ohio, don’t even require an annual report, while others only require reports to be filed every couple of years. The states that do require a report, however, will also ask for some sort of filing fee, so be ready to pay that, as well.
2. Hold the annual shareholders meeting
LLCs are exempt from having annual meetings unless there is some sort of operating agreement in place that requires such meetings; so while it is still a good idea to hold meetings to discuss any changes to the LLC or decisions by the owners, the law does not require them.
All corporations, however, must have an annual meeting for shareholders. Though not all shareholders have to attend, you do have to give them adequate notice of when and where the meeting will take place. During the meeting, you must keep track of the minutes, detailing any decisions that were discussed and procedures that were followed.
Now, you do not have to file these minutes with the state or federal government, but you do have to have them on hand if a government official asks to see them.
3. Renew your doing business as/trade/fictitious name.
Like many regulations, states differ on when, and even if, a business must renew its DBA name. Some states require that these names be renewed every year; other states give you five, even ten, years before you have to renew again.
Most states will try and notify you when your DBA name is coming up for renewal, either by sending a notice to your office or to your registered agent. Often, renewing a DBA name follows the same process as filing for one — you pay a fee, fill out a form, and send it to your secretary of state or department of corporations.
However if you had to publish your DBA name in a local paper for a few weeks, which some states require, it is unlikely that you will have to do that again as part of the renewal process.
4. Determine your estimated tax payments
Sole proprietors, partners, S-Corporation shareholders and the self-employed all have to make estimated tax payments if they expect to owe more than $1,000 for their annual tax return. Corporations that expect to owe more than $500 also have to make estimated tax payments.
The IRS splits the year up into four separate periods, and each period has a particular deadline for payments. It is important to note that if you underpay by a substantial amount, you may face additional fines, but as long as you owe less than $1,000, or have paid at least 90 percent of that year’s taxes, you will only be required to pay the difference.
The most important step in keeping your business compliant with the law and in good standing with the state is to research what your state requires from the companies within its borders. Again, every state is different, though the main difference will be deadlines and fees.
So do your homework, mark your calendars, and make sure that you stay on top of what you need to do. The last thing you want is to have to grapple with the government and pay the fees necessary to bring your company back into compliance.
Deborah Sweeney is the CEO of MyCorporation, an online filing services company that specializes in corporation and LLC formation, registered agent, DBA, and trademark & copyright filings.