What is business compliance?
Business compliance refers to how well a business follows the federal, state, and local rules and requirements that govern it. Every state has its own rules and regulations that need to be followed. This is done to keep a business compliant and in good standing.
The details of these laws can also vary depending on what industry your business is in, where it is formed, and the type of business structure you have chosen. As your business grows and changes over time, so may your compliance needs, so it is important to check often to ensure you are not putting yourself in the way of any unnecessary risk.
What is included with a business compliance check?
No matter what state or industry your business is part of, our service provides you with comprehensive support. You will work one on one with one of our experienced specialists who will complete the required research on your behalf to check the current status of your business with the state. You will be advised about any upcoming requirements to ensure you don't miss any important deadlines or filings. If we find that your business has fallen out of good standing, we will provide you with the information you need to get your business back on track.
Why is staying compliant so important?
Keeping your business in good standing with the state is necessary for a number of reasons. It allows you to maintain the liability protection gained from incorporating the business. By staying compliant, you are providing the state with information about the operations of the business, maintaining transparency, and demonstrating integrity.
What is good standing?
When a company is in "good standing," it has met its annual state filings and requirements and is seen in the eyes of the state as fully active and compliant. This means that you are maintaining your legal separation from the business and are protected by limited liability.
What are the basic requirements of staying compliant?
Even though the requirements vary from state to state, there are some key requirements to keep in mind when keeping a business compliant.
- File your initial report: Some states require that you file an initial report upon forming your business. An initial report usually contains basic details such as the business description and address, registered agent information, and the names and contact details of the entity's officers, directors, or members.
- File your annual reports: Annual reports are used to provide the state with updated information about a business, including information about the directors or members and the registered agent information. This provides the state with regular updates about the business and ensures their records are current.
- Meet registered agent requirements: A registered agent acts as the main point of contact between your business and the state, as a means to communicate and accept legal and official documents.
- Pay your franchise taxes: Some states may require you to pay a franchise tax. A franchise tax is a fee that is paid to a state for the privilege of operating a business in that state. The amount of the fee can vary from state to state and is usually required regardless of income.
- Business licenses and permits: Business licenses and permits government issued certifications that allow you to operate your business in your industry, city, and state. While the exact requirements vary depending on the state and local jurisdiction, licenses and permits are a often mandatory prerequisite for your business to operate legally. You can find out which licenses you need by using our business license compliance service.
What happens when a business fails to meet its requirements?
When you fail to meet your ongoing requirements, you can expose yourself to the possibility of financial obligation for the business' debts. The state can also choose to impose fees, fines, franchise tax fees and other penalties against the business. Falling out of good standing also makes you ineligible to file a foreign qualification (ability to conduct business in another state). If the business remains in bad standing long enough, the state can even choose to dissolve your business completely via an administrative dissolution.
