Starting a small business is a big deal. You’ve probably spent a lot of time figuring out how to set it up legally, filing all the necessary paperwork with the state. But once your business is up and running, things can get hectic. Between finding clients, managing employees, and developing your products or services, it’s easy to let some legal obligations fall by the wayside.
Remember, setting up your business as a corporation or LLC is just the first step. It’s crucial to maintain your company’s legal ‘good standing’ with the state. If you don’t, you could face fines, or even have your business dissolved by the state. Worse still, if someone sues your business, they could go after your personal assets.
But don’t worry, it’s not hard to keep your company in good standing. Here’s a simple checklist to help you out:
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File Your State Paperwork on Time: After setting up your LLC or corporation, you’ll likely need to file an annual report or statement with your state, along with a small fee. The specifics vary by state, so check with your state’s secretary of state office or an online legal filing service to find out what you need to do. And if you make any changes to your business, you’ll need to file an Articles of Amendment with the state.
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Keep Your Personal and Business Finances Separate: This is a big one. Mixing your personal and business finances can cause all sorts of problems, from making your tax records a mess to putting your personal assets at risk if someone sues your business. Plus, corporations are legally required to keep their business and personal finances separate.
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Keep Your Registered Agent and Address Current: If you used a registered agent to set up your business, make sure to keep paying their fees. If you don’t, they’ll stop representing your company, your mail will get sent back to the state, and your company could end up in bad standing.
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Sign All Business Contracts with Your Proper Business Name: Always use your official company name when signing business contracts. Even a slight variation could cause problems.
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File a DBA for Any Name Variations: If you use any variations of your official company name in your business, you’ll need to file a Doing Business As (DBA) for those variations with your local government.
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Register to Operate in Another State: If you do business in a state other than the one where you set up your LLC or corporation, you’ll need to register as a Foreign Corporation/LLC in that state. If you don’t, you could lose your personal liability protection in that state.
By following these steps, you can avoid common pitfalls and keep your business in good standing with the state. It’s a small investment of time that can save you a lot of headaches down the road. Plus, you set up your corporation or LLC to protect your personal assets, so don’t put them at risk by neglecting your basic compliance requirements.
