How to make sure your small business is compliant
- 1 How to make sure your small business is compliant
- 1.1 Why is compliance important in business?
- 1.2 Update operating agreement
- 1.3 Update company articles
- 1.4 Record company meeting minutes
- 1.5 Submit annual report
- 1.6 Pay the declaration fee and franchise tax
- 1.7 Get EIN
- 1.8 Designated registered agent
- 1.9 Update business licenses and permits
- 1.10 Final thoughts
How to make sure your small business is compliant
What is business compliance? The answer is to meet a combination of internal and external business compliance requirements determined by its registration status.
The internal requirements defined by the U.S. Small Business Administration (SBA) are the form of record keeping Corporate enterprise. Record keeping varies depending on your physical formation. For example, a limited liability company needs to update its operating agreement. At the same time, the company needs to update the articles of association and keep detailed meeting minutes to maintain compliance.
External business compliance focuses on state and federal filing requirements. Small businesses may need to submit, pay or update the following necessities:
- Submit annual report
- Pay the declaration fee and franchise tax
- Obtain an employer identification number (EIN)
- Designated registered agent
- Document modification clause
- Update business licenses, permits and certificates
Why is compliance important in business?
Why is business compliance important?Keeping records updated provides the Secretary of State Accurate information about the business. This allows the company to maintain a good reputation. If you do not complete the annual declaration or pay related fees, the company may fall into a bad reputation. What if this happens? Small businesses may face the risk of involuntary dissolution and closure by the state.
Once you know which areas require your attention, you can easily manage compliance. Maintain a good reputation by meeting these internal and external compliance requirements in our small business compliance guidelines.
Update operating agreement
A company that has been registered as a limited liability company can draft a written operating agreement. The operating agreement provides the rules, structure and regulations for operating the LLC. This includes information about the ownership, rights and responsibilities of members of the limited liability company, the rules for joining and leaving the limited liability company, and the dissolution of the entity.
A limited liability company does not always require a written agreement. However, it is strongly recommended that limited liability companies write out operating agreements for business compliance purposes. This allows members to refer to written documents when they have any questions. If the state government needs to review the operating agreement, you will be able to easily share and prove the validity of the LLC. This document is updated annually to detail any changes made in the business.
Update company articles
Companies registered as companies usually need to draft articles of incorporation. company policy It has similarities with LLC operating agreement. The articles of association specify the company’s rules and regulations. Information on holding meetings, the functions of each company’s office, and shareholder voting procedures can also be found in the articles of association.
If the key details of the company’s internal management structure change, the articles of association must be updated accordingly for the purpose of internal business compliance.
Record company meeting minutes
Meeting minutes are records of notes taken during company meetings. The minutes of the meeting should be very detailed, clear, and arranged in chronological order.
These documents do not need to be updated after they are taken away during the meeting. However, it is usually necessary to record meeting minutes during each meeting in the company for future generations to refer to and use as a reference.
Submit annual report
The annual report records the changes and annual activities of the company throughout the year. For example, if a limited liability company appoints a new member, its annual report file will reflect the update of the name and address of the new member of the limited liability company.
Are annual reports and initial reports the same thing? Can not. The initial report is submitted when the company merges or forms a limited liability company. It is usually submitted only once, and the annual report is submitted on the scheduled date.
The annual report is submitted every year or every two years. The reporting rules may vary depending on the state where your company is located. Please contact your local secretary of state to determine whether your business needs to submit it annually or every two years, and before the submission deadline.
Pay the declaration fee and franchise tax
Reporting expenses are paid through annual or biennial reports. Fees may vary depending on the state where the company is located. If the company’s state charges these fees to companies and limited liability companies, franchise taxes are another important aspect of business compliance.
The timely payment of these expenses is an important aspect of small business compliance. If they do not pay on time, your business may be charged a late fee, which may be much more expensive. Small businesses may also be punished by the state for late payment, so it is recommended to pay any unpaid fees in advance.
EIN is the employer identification number. It is also called a tax number. Enterprises that merge or form LLCs are issued EINs by the IRS. This can identify the employer’s tax account and ensure that the company is collecting payroll taxes.
Where else can EIN play a role and ensure business compliance? If your business decides to hire employees, EIN is required. If you decide to open a commercial bank account or establish a company’s commercial credit, you also need an EIN.
Designated registered agent
The point of contact between a small business and its place of registration is the registered agent.
A registered agent can be an individual or a third-party organization that accepts process services on behalf of your business. The registered agent will organize these documents and deliver them to the business owner in a timely and discrete manner.
The registered agent must be a resident of the state in which they conduct business. They must have a physical street address to accept this document, and it can be used during normal working hours from Monday to Friday. Business owners can also act as their own registered agents. However, they must be able to meet these requirements, otherwise their business will face the risk of non-compliance.
Update business licenses and permits
Businesses usually require certain business licenses and permits to operate their company. These vary depending on the company’s industry, location (city and/or county), and company’s state. Once small businesses have obtained specific business licenses or permits, they will need to update them according to state requirements.
Not sure which business license you need? Consider researching business licenses with the Secretary of State to see which licenses and permits apply to your business.
There are many tasks to run a small business. Submitting the necessary paperwork, paying taxes and fees on time, and submitting reports and renewing each year will help keep the company running smoothly. Performing each activity indicates that your business is active and is prioritizing its business compliance.
If you are not sure whether you have a good reputation or need more information about business compliance areas related to your particular business, please contact your local Secretary of State. You may need to complete additional paperwork, such as submitting amendments to terms, obtaining a DBA, or ordering a certificate of good standing, to further enable your business to meet its submission requirements. They will be able to answer your questions and, if necessary, direct you to the appropriate point of contact for any and all compliance issues.
Deborah Sweeney is the CEO MyCorporation.com It provides online legal filing services for entrepreneurs and enterprises, including startup bundles including company and limited liability company formation, registration agency services, DBA, and trademark and copyright filing services.You can find MyCorporation on Twitter at @MyCorporation.