Every business has a unique set of licensing and registration requirements to meet based on its location and business activities. A restaurant in Queens, for example, will have a very different set of requirements from a retailer based in Delaware with two brick-and-mortar shops and an online store.
So with more than 150,000 licensing authorities in the U.S., and different rules for every business type and activity, how can you be sure your business consistently meets licensing and registration requirements as you grow and change?
Following are five key areas of compliance businesses must address to maintain continuous licensure and corporate good standing. This is important not only because it ensures that your business is meeting its legal obligations, but because compliance is the foundation of a thriving, growing business.
1. Secretary of State Registration
Depending on your business’s footprint and activities, you may be required to register with the secretary of state in states beyond your home state of incorporation, a process known as foreign qualification.
In each state where you are registered to do business, you must generally maintain good standing by keeping accurate records with state authorities, staying current on any required taxes, and maintaining a registered agent. These aspects of good standing are covered in further detail below.
2. Registered Agent
Your registered agent is the address where legal documents such as service of process and other important notifications are delivered. It is a physical office address open during business hours where someone can sign for these documents and forward them to the appropriate person in your organization.
Securing a nationwide registered agent service provides important protections for your business, ensuring that time-sensitive documents are delivered promptly and directly to the right people. It also provides your business with a measure of privacy. Look for a service that can guarantee same-day document delivery and redundant notifications to ensure that legal documents receive prompt attention from the appropriate parties in your business.
3. Tax Registrations and Exemptions
Depending on your activities, your business may need to register for employment taxes, sales and use taxes, corporate income or franchise tax, and other state and local taxes in multiple states. Knowing where to register can be challenging.
Many retailers, for example, sell some or all of their goods online today, enabling them to reach customers in any state. The 2018 U.S. Supreme Court decision in South Dakota v. Wayfair opened the door to significant expansions of state sales tax obligations for online retailers. In the wake of the decision, many interstate and online sellers may find that they need to register more widely for sales tax or apply for exemptions in new states.
Meeting state tax obligations is a key component of maintaining good standing with state authorities. To determine where your business must register, you should seek the advice of your accountant or other financial advisor.
4. Annual Reports
In most states where your business is registered to do business, you will also need to file timely annual reports. These reports provide basic information about your business to state authorities. They are generally due annually or biennially, although a few states have other reporting schedules.
Because the deadlines fall throughout the year, tracking annual report due dates and filing them on time can be a perennial distraction for businesses operating in multiple states.
In addition to annual report filings, businesses must generally report changes to information on record with the state within a specified period, usually 30 days. This may include changes to your address, company ownership, legal name, or contact information. Maintaining accurate records with state authorities is another key aspect of corporate good standing.
5. Business Licensing
Licensing is another critical area of corporate compliance. Depending on your activities, your business may be required to maintain a mix of state and local business licenses. Some, such as food and beverage permits, are industry-specific, while others, such as operating permits, may apply to businesses across the board.
Once again, you will need to evaluate your operating footprint and activities to determine your licensing needs.Once acquired, most licenses must be renewed on a specific schedule to maintain your authority to operate. Operating without a license is a serious infraction that can lead to citations, penalties, reputation damage, and business disruption.
The best way to mitigate these risks and protect your company’s licensing is to have access to accurate licensing data and dedicated compliance software for tracking renewal deadlines.
In addition to reducing risk and safeguarding your operations, business licensing can drive growth and profitability by expanding your operating horizons. In fact, businesses can achieve outstanding ROI on licensing by managing it efficiently and proactively.
Maintaining Compliance: There Is an Easier Way
If that seems like a lot of moving parts to manage, it is. And if you already have enough on your plate without piling mountains of government paperwork on top of it, we understand.
The fact is, you don’t have to manage all of this the hard way. You don’t have to maintain file folders overflowing with applications and sticky notes to track state filings. You don’t have to rely on email chains to see whether anyone reported that address change to the state. You don’t have to load state deadlines into calendars or spread sheets and hope the right person sees them in time to file.
Instead, you can take advantage of state-of-the-art software and expert services from a company specializing in business licensing and corporate compliance. Our company lets you enjoy all the advantages of worry-free compliance without all the work, so you can keep your eye on the prize—growing and protecting your business.