December is a non-stop whirlwind of family events, holiday shopping, and end of the year parties. But if you're a business owner, no matter the size and scale of your business, it's also that time of year to make sure you've got everything squared away for the New Year.
Waiting for your New Year’s resolutions will be too late for some legal business decisions.
Here’s a snapshot of some of the things that should be on your end of the year checklist.
Start the incorporation process before the end of this year.
If you started a new business and haven’t gotten around to incorporating or forming an LLC, you might want to get started before January rolls around. This is a critical step to protecting your personal assets (such as your personal property or your child’s college fund) from any liabilities of the company. That is, if your business should be sued or has bad debt, your personal property may be shielded from any judgment.
Many business owners wait until January 1 to incorporate or form their LLC. However, January is the absolute busiest time of the year at your secretary of state’s office and waiting to file until January puts you at the mercy of whatever backlog exists.
There’s another option and that’s selecting a ‘Delayed Filing' with a document filing company. With this option, you can get all your paperwork submitted now, and it will be held and filed on the first business day of the New Year (where you'll be at the front of the line).
Formally close an inactive business before the end of year.
Maybe you formed an LLC for a handmade soap business a few years ago, but over the past year, you've completely ignored this business. It has no revenue and no customers. In every sense, you've basically closed your business; however, you still need to file a formal termination for that LLC or Corporation. Otherwise, you’ll still be charged fees associated with the business. You'll still be expected to file an annual report (where applicable). And you'll still be required to submit tax returns to the IRS and state.
To formally close a Corp or LLC, you’ll need to file “Articles of Dissolution” or a “Certificate of Termination” document with the Secretary of State in whatever state your Corporation or LLC was formed (and in most cases, you'll need to settle any owed taxes before you can do this).
Along these lines, you should also cancel any kind of permit or licenses you hold with the state or county. And if you've been using a fictitious business name, you'll need to file an abandonment form. Make sure to take care of these matters while it's still 2011. There's simply no reason to pay an extra cent in fees toward a business you know you're retiring. Put that money towards your next venture instead!
Make sure you've filed your annual report for a corporation.
If you've gone through the work to incorporate your business, make sure you keep it in good standing. Most states require some form of an annual report filing (some every year; some every two years). If your state requires you to file this report, there is a specific due date for filing each year. In some cases, it's on the anniversary of your business' incorporation date; in other cases, it's when your annual tax statements are due; and in some cases, it's at the end of the calendar year. Be sure to know your specific filing deadline (check with your state's secretary of state office). Missing this deadline can result in penalties and late fees. And worst case scenario, your company can be subject to suspension or dissolution.
File ‘Articles of Amendment' for any changes you’ve made to your Corp.
Did you change your address? Or make a slight tweak to your company name? Did a board member or director leave the business? Any time you make a change to your corporation or LLC, you can basically count on having to file an official notification (referred to as an “Amendment”) with your state. In many states, these are called Articles of Amendment.
Tie up any other legal loose ends before the New Year.
The end of the year presents a perfect opportunity for you to tie up any loose ends that you may have put off throughout the year. For example: Did you file a DBA (Doing Business As) for your business name? Did you get a Tax ID number (or, Employer ID Number)? Are all your necessary licenses and permits in order?
Yes, December is an incredibly busy month. But no matter how busy you get, set aside some time to address your administrative obligations. Taking care of certain issues this year can save you money in fees moving forward. And it’s always nice to cross a few more things off your list to start fresh in the New Year.
Here’s to a happy and prosperous New Year!
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Nellie Akalp is a passionate entrepreneur, small business advocate, and mother of four. As CEO of CorpNet.com, an online legal document filing service, Nellie helps small business owners form an LLC or incorporate a business in order to start and protect their new business ventures the right way.