Required Maintenance for Business Entities: Do Your Business Records Need a Tune-Up?

Are you properly maintaining your business entity? Corporate entities are required to file annual reports with the Department of State. In addition, business entities are required to maintain business records, such as records of annual meetings or annual written consents of shareholders and directors, as well as maintaining up-to-date stock or membership interest transfer records. In addition to complying with law, the filing of annual reports and other “business maintenance” helps to protect business owners from personal liability.

Each year business entities are required to file annual reports with the Department of State. Annual Reports can be filed between January 1st and May 1st. Failure to timely file an annual report can result in fines (currently $400 for a profit corporation or limited liability company, plus the cost of filing the late annual report). If a report is not filed before the third Friday in September, the entity will be administratively dissolved by the Department of State. Fees to reinstate an administratively dissolved entity during the year in which it is dissolved are currently $600.00, plus the cost of filing the missed annual report. Fees to reinstate an entity increase for each year that an entity is dissolved.

The Department of State is NOT required to inform or remind business owners of this important obligation and has discontinued its prior practice of sending out reminder postcards. This is not unlike the obligation of a taxpayer to pay its taxes despite not having received notice from the Internal Revenue Service of this obligation. We have a service that will remind you that a filing is due and will file the report on your behalf if you elect to have us handle this for you. Please contact us if you would like us to help you.

Although your entity will not be dissolved simply for failure to maintain business records such as annual written consents and stock or membership interest transfer records, it is good business practice to do so. And, as mentioned above, proper maintenance of business records helps to protect business owners from personal liability.

Please contact our office if you would like us to help you “tune-up” your business records.