Now that we have entered the month of December, many individuals are scrambling to finish their Christmas shopping and are preparing for the holidays, while business owners are faced with a daunting list of tasks that can seem to add to this already hectic time of year.
As 2021 comes to a close, it’s time for businesses to begin thinking about their end of year obligations. In order to help minimize stress during this busy time, CorpNet has created a comprehensive year-end compliance checklist to help ensure that your business remains in good standing and is ready for 2022.
File Your Annual Corporate Documentation
The first step to preparing for the end of 2021 is to file a Statement of Information, also known as an Annual Report. A majority of states require this to be filed with the Secretary of State’s office if you have a registered C Corporation or Limited Liability Company (LLC). You will be responsible for updating the names and address of LLC staff members, registered agent information, as well as the number of shares issued. If you have notable changes such as changes to your company’s name, business address, or ownership, you may need to file an Articles of Amendment.
Please keep in mind that corporations are also responsible for holding an annual board meeting. During these meetings, ensure that annual meeting minutes are being taken and records of these are kept for at least seven years. When creating meeting minutes it is important that the location, date and time are indicated in the document. You should also include who was present for the meeting and who was absent. Details of the meeting should also be shared in your meeting minutes with the time the meeting adjourned. The only states that are excluded from taking meeting minutes are Kansas, North Dakota, Oklahoma, Nevada, and Delaware.
Change a Business Structure
COVID-19 has caused some challenges for business owners so it may benefit some to change the structure of their business. From liability protections to tax breaks, there may be multiple reasons why someone would want to amend their structure.
It is recommended that you speak with your business attorney or accountant prior to completing a structure conversion. Please also note that not all states allow for conversions, which means you may have to dissolve your current entity and form a new company under the new structure.
Renew Sales Tax Licenses and Reseller Permits
If you sell products or services that are subject to sales taxes, you will need to ensure you register for a sales tax license. For those who are wholesalers, you will need to get a reseller license or a resale certificate. Please be aware that the timeline for needing to renew these licenses may vary by state, and some may be good without having to renew. If in doubt, check with your state sales tax agency.
Renew Business Licenses and Permits
Each business industry may have specific licenses and permits that may need to be obtained, so be sure you do your research on what is required by your state and local agencies. Contact your city, county and state business development offices for more details on what is required for you to be in compliance.
Besides your business license which must be renewed annually, there are various local licenses such as parking lot permits, health department permits, environmental permits, and many more. Due to the various types of licenses and permits, it is recommended to do your research or seek out a professional to confirm what licenses you may need.
Other Federal Filing Requirements
Generally, the only federal requirements that businesses are responsible for are paying for federal taxes and complying with the Affordable Care Act. The Affordable Care Act requires that businesses with 50 or more employees inform the IRS if they provide health care coverage to their staff.
In addition, federal law requires businesses to be compliant to the below laws but no documentation needs filed:
- Americans with Disabilities Act (ADA) regulations
- Copyright laws
- Marketing and advertising laws
- Workplace health and safety laws
- Workplace poster laws
Intellectual Properties
If you haven’t registered your business’s trademark, now is the time to do so! It is highly recommended to register your trademark to help protect your business and help distinguish you from other companies. If you have registered a trademark, please be aware that between the fifth and sixth year you will be responsible for filing a “Declaration of Use”. You will also have to file a “Declaration of Use (or Excusable Nonuse)” and “Application for Renewal” between the ninth and tenth year. Every 10 years you will need to refile ownership of your trademark.
Close a Business
It can be a difficult decision to decide to close the doors of your business. No matter how hard the decision is, you will still need to ensure that you are in compliance while closing as you could still be responsible for the actions of your company. The easiest entities to close are sole proprietorships as you just need to pay off your debts and make vendors and customers aware you are closing. While partnerships, LLCs, and corporations, on the other hand, should have a dissolution process written out in their operating agreements. LLCs and Corporations will also have to file Articles of DIssolution or a Certificate of Termination with their state.
It is important to remember that you will also have to cancel all other permits, licenses, and business names acquired in the states in which you do business. Lastly, you will need to settle any financial obligations your business has and contact the IRS regarding your business closure. You will be responsible for paying your final taxes and making sure you check the box labeled “final return” on your tax returns. If you have a corporation, you will need to file Form 966 for Corporate Dissolution or Liquidation.
As 2022 is fast approaching, we hope this checklist helps ease the stress of tying up the end of the year. By devoting this type of attention to your business, this will not only help end your current year on a high note but will set you up for success in the new year.
If you have any questions on how to stay compliant as the year comes to a close, please reach out to us at 310-534-5577 or [email protected]. We’d be happy to answer your questions and help get you on the right track!
For details on the full article, or to download their checklist, see: https://www.corpnet.com/blog/end-year-business-good-standing/?utm_source=CorpNet+Main+Mailing+List+2020&utm_campaign=95fd0e7413
