Nellie Akalp of CorpNet, offers this End of the Year Checklist
for small business owners.
The final homestretch is a busy time of the year for the small
business owner, with your time pulled between trying to meet end of year sales
goals and closing out Q4 projects to holiday planning and parties. However, it’s
also a critical time of year for wrapping up any legal loose ends associated
with your business.
There are a couple of steps to take to make sure your business is
legally fit for 2014. By doing so, you’ll be making sure your business gets
the right start in the New Year, and you won’t end up paying extra in
administrative fees and fines. Here’s what you need to consider before the
calendar hits 2014:
1. Incorporate or change your business structure
If you’re like many small businesses you may have started as a sole
proprietorship or partnership. But many businesses eventually outgrow these
business structures. If your business is not incorporated, you may want to
incorporate (either by forming an S Corp or LLC) to shelter your personal
assets and perhaps give you more flexibility and cost savings when it comes to
your taxes.
2. Close any inactive businesses
If you’ve ever registered a business with the state and are no
longer operating it, you need to file a formal termination with the state as
soon as possible. Why? Until that paperwork is in, you’re still going to
be charged for any fees associated with the business, you’ll
need to file an annual report, as well as submit any tax returns.
To close a business, you need to file an “Articles of
Dissolution” or “Certificate of Termination” document with the Secretary of State
where your Inc. or LLC was formed. Keep in mind that you will need to settle
any owed taxes before you can do this (but again, the sooner you take care of
this, the better…when it comes to taxes, ignoring the problem won’t
make it go away).
Make sure to take care of these matters while it’s
still 2013. There’s no reason to keep paying for a business that’s
basically been retired.
3. Hold an annual meeting for your Corporation or LLC
If you’ve gone through the work to incorporate your business, make
sure you keep it in good standing. If you haven’t held an annual meeting for your Corp
or LLC this year, be sure to get one in before the end of the year. Along with
the meeting, you’ll need to generate written minutes/resolutions to be signed
by the shareholders (Corporation) or members (LLC). If this will be your first
meeting, you can find free meeting minutes online to use as a starting point.
4. Make sure you file an annual report for your corporation/LLC
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. Missing this deadline can result in penalties
and late fees, and depleted state budgets mean that we’re seeing several
of these late fees grow.
5. File an “Articles of Amendment”
to record any company changes
If you made any changes to your business (for example, if you
changed your business address, dropped the .com from your official company
name, authorized more shares, or a board member left), you’ll
need to file an official notification with your state.
This may seem like a pretty trivial thing, but it’s
actually essential to keeping your LLC/Corporation in good standing. For
example, if your business happens to be sued and your paperwork isn’t
up to date, it’s possible that the plaintiff will try to come after you
personally.
6. Review your estimated tax payments for 2013
Now that we’re nearing the end point of the year,
review what your business has made year to date and assess your estimated tax
payments to avoid underpayments or overpayments. You’ll want to adjust
your final 2013 payment (which is due Jan 15, 2014) as needed.
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