Top FAQs for Running a Business
Running a business and keeping it in compliance can be challenging. Below are the most common questions we receive from business owners.
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Do I need to register and process payroll taxes?
Another critical step that businesses hiring employees must take is to register for payroll taxes. In the United States, tracking, reporting, and paying payroll taxes are required legally to hire and pay employees. Some taxes must be withheld from employees’ paychecks, and the employer must pay some. Businesses must register for the appropriate payroll tax accounts at the state and federal levels (and sometimes the local level if there is a local withholding tax) to process employee payroll and file returns.
The rules and requirements vary by state, but generally, payroll taxes might include:
- Federal income tax
- State income tax (SIT)
- Federal Unemployment Insurance Act (FUTA) Tax – paid by the employer; not withheld from employees’ paychecks
- State Unemployment Insurance Tax (SUI) — generally paid by the employer and not withheld from employees’ paychecks
- Social Security Tax
- Medicare Tax
- Local Income Tax
As you can imagine, it can get a bit confusing and time-consuming to research a state’s requirements, complete the paperwork, and deal with the state’s tax administration office. With CorpNet’s help in setting up your state income tax account (anywhere in the U.S.), you can stay focused on other business to-dos.
Do I need to collect sales tax?
Before a retailer or service provider can open for business, they first must get approval from the state for sales tax registration. Not all states charge sales tax, and not all products and services are taxable, so it’s essential to learn the facts before you find yourself in trouble.
Currently, forty-five states and the District of Columbia collect statewide sales taxes, while five states do not have a statewide sales tax. The states not collecting sales tax include Alaska, Delaware, Montana, New Hampshire, and Oregon, although Alaska does allow localities to charge local sales taxes.
Local sales tax rates are usually determined at the county level. In all, 38 U.S. states allow localities to set their own sales tax rates, with the highest rates in Tennessee, Louisiana, Arkansas, Washington, and Alabama.
Whether the product you are selling or the service you are offering is deemed taxable depends on a few factors, such as:
- The type of product or service
- Your business location
- Your customer’s location
In general, products are taxable, but states can declare some items (e.g., prescriptions and food) to be tax-exempt. Increasingly, states are taxing services, too, so check with the department of revenue in the states where you own or plan to establish a business.
States also vary on which specific location factors affect the collection of sales taxes. State tax rates may be based on the origin or destination of where the product or service is sold or a combination of both.
Do I need to file an annual report?
Virtually all states require some form of ongoing business entity filing. The timing of the report and the name of the report varies from state to state. While most states refer to this filing as an Annual Report, some states require a Biennial Report or a Decennial Report.
And to add complexity to the matter, the report itself could be referred to as one of the following:
- Annual Report
- Business Privilege Tax Return
- Statement of Information
- Annual Franchise Tax Report
- Annual Registration
- Business Entity Report
- Periodic Report,
- Biennial Occupation Tax Report
- Public Information Report (PIR)
- Ownership Information Report (OIR)
- Annual List of Officers and Directors
- Annual List of Managers or Members
While that can feel pretty intimidating, you don’t have to let that diversity hamper your efforts to keep your business in compliance. CorpNet is here to provide assistance with an annual report filing.
What are annual meetings?
Annual meetings are a formal discussion of a company’s goals, strategy, financial situation, proposed changes to governance documents, or other pending decisions that require a vote by or approval of the business’s owners. Whether a company must hold an annual meeting varies by state and entity type.
Meeting minutes keep an official account of what was talked about and resolutions (decisions and actions) made at formal meetings. As I mentioned earlier, well-written meeting minutes are critical for demonstrating corporate compliance and maintaining its owners’ personal liability shield (known as the corporate veil).
Some states also require new corporations and LLCs to hold an initial meeting shortly after their formation and record minutes of that meeting.
Typically, meeting minutes are recorded by the corporation’s secretary (or another individual appointed at the meeting). One of the best ways to ensure that minutes from meetings are well-organized, thorough, and structured consistently from one meeting to the next is to use an annual meeting minutes template, which is something CorpNet can help you with. Approved meeting minutes should be kept with other vital LLC or corporate records.
Do LLCs need to keep meeting minutes?
Generally, states don’t require Limited Liability Companies to hold annual member meetings and write minutes. However, if the LLC’s operating agreement states that members must hold annual meetings and record minutes, they must follow through on that provision to demonstrate their adherence to business compliance. Having an annual meeting and keeping a record of what was discussed helps validate that business owners are treating the limited liability company as a separate legal entity. That measure reinforces the corporate veil that protects LLC members’ personal assets from the company’s legal and financial liabilities.
Examples of what LLC members might discuss during their annual meeting include the introduction of new members, departure of existing members, proposed ownership distribution changes, the LLC’s financial performance during the past year, and the company’s goals for the year ahead.
Information captured in an LLC’s annual meeting minutes usually includes:
- The meeting’s date, time, and location
- Who wrote the minutes
- The names of the members in attendance
- Brief description of the meeting agenda
- Details about what the members discussed
- Decisions made or voting actions taken
- The time that the meeting adjourned
All persons who attended the meeting should have an opportunity to review and amend the minutes before making them an official part of the LLC’s records.
Which states require corporations to keep meeting minutes for their annual board meeting?
Corporations are also required to hold an annual board meeting with corporate minutes taken. Corporate annual meeting minutes serve as a record of a business’s annual meeting. With the exception of Delaware, Kansas, Nevada, North Dakota, and Oklahoma, state governments require corporations to keep meeting minutes.
What is typically included in a corporation’s annual meeting minutes?
Examples of the information that might appear in a corporation’s annual meeting minutes include:
- Date, time, and location of the meeting
- Who attended and who was absent from the meeting
- Meeting agenda items with a brief description of each
- Details about what was discussed during the meeting
- Results of any voting actions taken
- The time when the meeting adjourned
After annual meeting minutes have been approved (as determined by the company’s bylaws), a business should keep the original executed copy in a safe place. A business should keep its minutes for at least seven years, and make them available to members of the corporation (e.g., shareholders, directors, and officers) who make a “reasonable request” to review them.
Can I change my business’ entity type?
A conversion is when a company decides to convert their entity from one entity type to another entity type. Not all states allow conversions. In those states where a business conversion is not recognized, one would need to dissolve their current entity and form their company as a new entity.
CorpNet™ is here to assist you every step of the way and can easily file your conversion documents on your behalf for a minimal service fee.
Can I change my registered agent?
Yes, you can absolutely change your registered agent. The process you’ll need to follow depends on your location and the requirements vary from state to state. The SBA offers links to all states’ websites where you can begin your research to determine what information you’ll need to provide and what form(s) you need to complete. You may or may not have to pay a filing fee to change your registered agent. Again, this will depend on your state’s rules.
When do you have to file an articles of amendment?
For significant changes, the state may require your business to file an Articles of Amendment.
Here are some examples of significant changes an Articles of Amendment would include:
- Changes to the company name
- Changes to the business address
- Changes to the members of the Board of Directors
- Changes in a company’s business activities (i.e., the purpose of the business)
- Changes in ownership
- Changes to the board of directors
- Change in management format (e.g., member-managed to manager-managed or vice versa) of an LLC
- Change in the type of stock offered by a corporation
- Changes in the number of shares authorized by a corporation
What is a DBA?
A DBA is a name that’s different from the legal name of the company. It is a name the business wants to use when marketing itself to the public and dealing with customers. A sole proprietor, LLC, or corporation is said to be “doing business as” whatever fictitious name it has filed.
Can I expand my business into another state?
When an LLC or Corporation wants to expand its operations into states beyond its state of domicile (i.e., its home state), it must go through a process called Foreign Qualification. In other words, the company must qualify to conduct business in the other state(s). Usually, this involves filing a Certificate of Authority (sometimes called a Statement and Designation by a Foreign Corporation) with the Secretary of State office in the additional state(s).
Foreign Qualification, where allowed, saves business owners from the more extensive process of creating a new business entity in the state(s) where they want to expand.
If you are interested in foreign qualifying your Corporation or LLC, CorpNet can help by saving you time and money by handling the process for you.
Where can I get a certificate of good standing?
A Certificate of Good Standing is Certificate is to ensure that the corporation or Limited Liability Company (LLC) has kept up with their responsibilities to the state and specific tax boards as a legal entity and that the specific entity is current and in good standing with the state. CorpNet™ can easily request a Certificate of Good Standing from the Secretary of State. The state will then issue the Certificate of Good Standing for your specific company as long as the company is current and in good standing with the state of formation.
What do I need to file if my company is not in good standing?
It depends on your specific state but generally speaking the state will require you to file a reinstatement on behalf of the Corporation or Limited Liability Company. You may have to file some additional state-required documents that are past due depending on the reason your company has fallen out of good standing to begin with. But generally speaking, a simple reinstatement should do the job!
What is an apostille?
An Apostille is an additional authentication/certification required for international acceptance of documents including Articles of Incorporation and Articles of Organization.
The completed Apostille form certifies the authenticity of the signature on the documents. This is usually required when forming a corporation or Limited Liability Company (LLC) from a country outside of the United States, an Apostille is required upon every signatory country to accept Apostilles of the other signatory countries.
What do I do if I need to close my business?
Closing a company you helped create is never an easy decision. However, if you decide it’s time to close up shop, make sure you’re in compliance, or you could still be responsible for the business’s actions and financial obligations.
Sole proprietorships are the easiest to close down as long as you pay off any debts and notify customers and vendors. Partnerships, corporations, and LLCs should have a structured dissolution process outlined in their operating agreements. Usually, it begins with a formal vote and requires signatures from all partners and board members. Corporations must have consent from two-thirds of the voting shares. The rules for LLCs vary by state.
Corporations and LLCs must also file Articles of Dissolution or a “Certificate of Termination” or “Certificate of Dissolution” with the state. If you have locations in other states and have filed for Foreign qualification, you do not need file documentation in the other states, but you need to cancel any out-of-state registrations. Don’t forget to cancel all registrations, permits, licenses, and business names acquired in all the states in which you conduct business.
Finally, you must settle all the company’s financial obligations (vendor invoices, employee payroll taxes, and sales taxes). Then inform the IRS about your business’s closure, pay your final taxes and check the box labeled “final return” on your tax returns. Corporations are required to file Form 966, Corporate Dissolution or Liquidation.
How can I make sure I don’t miss a compliance deadline?
Our Compliance Portal stays on top of corporate compliance tasks and filing due dates so you can save time and money. Our automated notifications help you do what you do best – run your business! Signing up is easy and the service is completely free.