At the end of the year, you should ensure several critical business compliance responsibilities are completed. Compliance entails operating within the legal frameworks that apply to your business with local, state and federal jurisdictions.
Many compliance responsibilities apply to LLCs and corporations, though some may apply to all types of businesses. Taking care of these items will help you begin the new year the right way. This checklist can help you stay ahead of end-of-year business responsibilities.
1. Annual reports
Limited liability companies (LLCs) and corporations must submit an annual information report to the filing office in their state of origin and any other state where they are authorized to operate. (In some states, this filing is done every two years.)
If you fail to file a required annual report, you’re likely to fall out of good standing and face fines and penalties. If you think you’ve missed one, the time to take care of it is now.
2. Franchise taxes
Another common requirement for LLCs and corporations is franchise taxes. A franchise tax, also known as a privilege tax, allows a business to be chartered or operate within a state. Some states may tax companies even if they are incorporated elsewhere. This tax is distinct from annual federal and state income taxes.
3. Amendments
If changes have been made this past year to the information set forth in your Articles of Organization (for an LLC) or Articles of Incorporation (for a corporation), you’re required to file an amendment with the state of formation. These changes, for example, could include a company name change, or a change from member-management to manager-management, or vice versa.
Filing Articles of Amendment indicate that the proper representatives of the company have agreed to changes. State approval verifies that your company has complied with legal standards and has officially recorded the changes.
If you are foreign qualified (registered to do business through the Secretary of State’s office in another state), you may also have to file an amendment to your Certificate of Authority if the information in that document (such as the company’s name) has changed.
4. Beneficial ownership information reporting
If you have an LLC or corporation, your company may be one of the more than 32 million companies affected by the Corporate Transparency Act. These companies are required to file a beneficial ownership information report with the Financial Crimes Enforcement Network (FinCEN). This report includes information about the company and the individuals who ultimately own or control the business.
Reporting companies formed prior to January 1, 2024, must provide information about the company and its beneficial owners. Reporting companies that are formed in 2024 and beyond must provide information about the company, the beneficial owners, and the company applicant. There are varying deadlines for the initial report depending on the formation date. For more information, see What is the Corporate Transparency Act? CTA basics.
While there is no annual reporting requirement, businesses that have already filed an initial report are required to file an updated report for changes to previously provided information about the company or the beneficial owners. The deadline is no later than 30 days after the date of the change. For more information, see Beneficial Ownership Information ongoing update requirements.
5. Business licenses
Check that you’ve obtained all appropriate business licenses and keep note of their renewal dates. If you’ve expanded or changed your business in the past year, you might need new licenses or may no longer need one that you have. If you have home-based workers, you may need to obtain a home occupation permit.
6. Foreign qualifications
If you are planning on doing business outside of the state you formed in, you need to register with the Secretary of State in those states. This process is called "foreign qualification". If you’re operating in a state without having foreign qualified, you could carry fines and penalties into the new year. If you have employees who will be working for you while located in states other than the formation state, this can also possibly trigger the need to foreign qualify.
7. Dissolutions and withdrawals
If you are ceasing operations completely, you should take steps to properly dissolve your company. If you are not ceasing all business but are only ceasing to do business in a state (or states) in which you were foreign qualified, you should properly withdraw from those states. Dissolutions and withdrawals can keep the business in good standing and prevent you from having to file annual reports and pay taxes in your formation state and states of foreign qualification in 2025. It can also protect you from business identity thieves who prey on inactive and delinquent entities.
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Stay ahead of your business responsibilities with BizFilings — not only for year-end services but for the support you need throughout the life of your business. Contact us to learn more.
