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Incorporating Can Be Simple – Stay Compliant With Our Checklist

Published on May 13, 2013

Summary

After Incorporating, failing to regularly meet ongoing compliance requirements can have big consequences for small businesses.
incorporating checklist Remember the age old saying “with great power comes great responsibility?” The same rings true when running a business. After incorporating, failing to regularly meet ongoing compliance requirements in a timely manner can have big consequences for small businesses. To stay organized and ensure requirements are made, many businesses utilize compliance kits to help organize important documents and guides – all in one place. Follow these guidelines and you’ll be on your way to maintaining good business standing: If you’re either a Corporation or an LLC, most states require:
  • Annual / Biennial Reports: Due dates and fees will vary by state. Check our state guide to find out the details for your business
  • Franchise Tax: A moderate fee paid to the state for the privilege of operating in that state
  • Initial Reports: Incorporating in California? You may have to file an initial report before doing so
If you’re a Corporation (both C Corps and S Corps), you must:
  • Hold initial and annual director and shareholder meetings
  • Adopt and maintain updated bylaws
  • Issue stock to shareholders
  • Record all stock transfers
If you’re an LLC, it’s recommended that you:
  • Maintain an updated operating agreement
  • Issue membership shares
  • Record all membership interest transfers
  • Hold annual meetings of members and also of managers
While most owners aim to maintain good business standing, what happens if your business falls short? Rights and assets tied to your business can be revoked and become unprotected. Additionally, the state may deem your business in “bad standing,” which could lead to administrative dissolution. Owners of corporations and LLCs must take steps to show that the business exists separately from the owners. If owners fail to do so, they could be ‘piercing the corporate veil,’ which is a legal term used when LLC’s or Corporation owners lose their limited liability rights, ultimately putting the owner at risk of sacrificing personal assets to satisfy business debts. In order to avoid these risks, BizFilings suggests that all business owners should consider the following steps when thinking about incorporating a business:
  • Register your company by obtaining a business license
  • Document all notable business transactions
  • Don’t mix your business with your personal finances
  • Make your business known by creating business cards, opening a business credit card and signing important documents with the Company name