After incorporating a business, brace yourself for a series of compliance requirements.
Regulatory compliance entails a corporate entity observing or meeting select requirements and stipulations passed by local, state, and federal governments. The current regulatory and compliance landscape is now more intricate than ever. This is because local and state governments are expanding compliance requirements, raising fees, and increasing enforcement efforts. For this reason, even the most committed and meticulous businesses find it taxing to keep pace with the constantly changing and new entity compliance requirements.
As Kluwer notes, “failing to regularly meet ongoing requirements in a timely manner can have big consequences for small businesses.”
Entity compliance requirements keep changing due to various business actions and constantly changing laws. But before year-end, you should engage in the following key areas to stay in compliance:
- Recordkeeping: Keep records according to state law requirements.
- Tax reporting and payments: Make on-time and correct tax-related payments and filings of all business sales, incomes, and taxes.
- Registered agent representation: Consider appointing and keeping a registered agent in your organization’s home state and in each foreign state of operation.
- Service of process: Device and keep a plan guiding your response to lawsuits.
- Annual report filings: File your state-required reports and pay state fees before the set deadlines.
- Entity contraction or expansion: Remember that state-related corporate undertakings like contractions and expansions, whether voluntary or involuntary, can activate compliance breaches.
- Other entity changes: Make sure you file pertinent documents for shares issued, business name changes, and more.
- Business licenses: Secure and keep your state- and local-required business licenses.
The old adage, “prevention is better than cure” applies to stay in compliance with your entities. To reduce or avoid business-compliance-related issues;
- Monitor your business records regularly to ascertain that your corporate entity’s information in each state is accurate.
- Schedule your fees or tax payments and report and form filings before the deadlines set in each state that your entity qualifies to operate in. Better still, ensure that the person tasked with keeping those deadlines is cognizant of them early enough.
- Develop and execute a communication system for compliance-related issues among legal, accounting, and management professionals.
- Create a master calendar viewable by all affected corporate stakeholders. Keep a single, safe archive of entity documentation and align it to your compliance calendar.
Staying in compliance with your entities can be a difficult feat. Yet, the above checklist will prevent you from falling out.
Contact us if you have any questions on how to stay in compliance with your entities.