Best Practices for Year-End Business and Corporate Governance Compliance

Wrap up the year on a strong note—both for yourself and your business. Check out the essential compliance steps to start the new year prepared, confident, and ready for continued success.  

How to end the year in good legal standing?

First, let’s look at a few things to know: 

• Compliance regulations vary by state, so you need to know the rules and due dates for the required annual documents in each state where you operate.

• Failure to submit reports and forms on time can result in fines, penalties, risk of personal liability, and even suspension or dissolution of a business.

• Handling business compliance matters now allows you to enter a new year ready to run a successful business.

  1.     File your Annual Report 

  • To remain in good standing, you need to fulfill all annual report requirements.

  • Many states require LLCs and corporations to submit an annual report every year, every other year, or on some different timeline. Due dates for these filings vary by state.

  2.      Member or shareholder meetings

  • LLCs and corporations may be required to hold an annual meeting of the company’s owners and record meeting minutes.

  • You should refer to your operating agreement or bylaws to ensure proper conduct of meetings and preparation of minutes.

  3.     Report key business changes

  • For significant business changes, you need to file an Articles of Amendment to update what was initially filed in your formation documents.

  • Examples: changes to the company name, business address, members of the Board, company’s business activities, ownership, management format of an LLC, type of stock offered by a corporation, number of shares authorized by a corporation

  4.     Business structure suitability: entity conversion/new entity formation

  • The business entity type you have chosen may no longer be the ideal structure for optimal tax outcomes or legal protections. If this is the case, you may convert from one entity to another, or in states that do not recognize conversion, formally dissolve the entity and form an entirely new company.

  • If you have your new entity officially set up and running on the first day of the new year, that clean break between entity types can help simplify tax filings.

  5.     Renew business licenses and permits

  • Many licenses must be renewed annually. 

  • Certain business activities may trigger licensing changes, such as adding or closing a location, participating in a merger or acquisition, or introducing a new product or service. If so, you may have to obtain additional licenses or cancel them.

  6.     Income tax payment status

  • It can be helpful for disregarded business entities that make quarterly estimated income and self-employment tax payments to review if what you’ve paid thus far aligns with what you will owe for the year.

  • Then, discuss with your tax advisor if you should adjust what you’ve planned as your last tax payment for this year.

  7.     Business expansion beyond state boundaries: foreign qualification

  • If you’ve conducted activities outside your formation state that constitute “doing business” in those states, you may be subject to foreign qualification requirements.

  • These include registering to do business with the state’s corporation filing office, appointing a Registered Agent, and maintaining a registered office in that state.

  8.     Close a business

  • If you decide to close your business, make sure you’re in compliance, or you could still be responsible for the business’s actions and financial obligations.

  • Corporations and LLCs must file articles of dissolution to formally dissolve the legal entity and withdraw from all states where the business was registered.

  • You must settle all the company’s financial obligations, then inform the IRS about your business’s closure and pay final taxes.

  10. Review, revise, and update contracts as necessary

  • While not all contracts can be revised each year, we recommend reviewing your current contracts to ensure that they comply with regular changes. It is also important to update contracts to help mitigate risk, manage changing priorities, and ensure that the relationship is still on track with the terms of the contract. 

Need help? Contact Parsus Law today.

At Parsus Law, we help set-up your business entities and ensure they remain in good standing with the state. Contact the Parsus Law team today to learn more about how we can help support your business.