The Launch Blog: Expert Advice from the CorpNet Team
Can I Change My Sole Proprietorship to an LLC?
If you’re wondering if you’re able to change your Sole Proprietorship to a Limited Liability Company, the answer is a resounding yes. And I’ll go a step further and tell you that not only can you change your Sole Proprietorship to an LLC, but that you probably should change it. Changing your Sole Proprietorship to an LLC, which means the business would be recognized by the state and operate under a legal structure, isn’t a particularly difficult task, but it needs to be done carefully and in accordance with the rules of your state. Not taking the proper steps and fulfilling state...
Does a Foreign Corporation Need an EIN?
Obtaining an Employer Identification Number (EIN) is one of multiple steps involved in getting a foreign-owned Corporation set up to conduct business in the United States. An EIN is a nine-digit federal tax ID number issued by the Internal Revenue Service (IRS). All non-exempt business entities (domestic and foreign operating) that operate in the United States are subject to federal income tax, and the EIN is what the IRS uses to track a company’s IRS filings, tax liabilities, and payments. Therefore it is safe to say that most foreign Corporations will require an EIN to maintain...
Who is Authorized to File a BOI Report?
If a company is required under the Corporate Transparency Act to submit a BOI report to FinCEN, an authorized individual must file the report. But who is authorized for file the BOI report? The business’s owner may file the BOI report or authorize an employee or even a third-party service provider to prepare and submit the filing on their reporting company’s behalf. The filer must provide basic information about themself, including their name and email address. Examples of the types of third parties who are authorize to file BOI reports include: Attorney Accountant Enrolled agent Business...
Is the Beneficial Owner Information Report a One-Time or Recurring Filing?
Reporting companies must file a Beneficial Ownership Information report with the Financial Crimes Enforcement Network (FinCEN). The BOI report is considered a one-time filing. If a business entity’s initial BOI report is accurate and no information filed in the report changes, the company does not have to submit any subsequent reports. When an Initial BOI Report Due and How You File One The BOI reporting deadlines depend on when a reporting company was created or registered: Business formed before January 1, 2024 – The initial BOI report is due by January 1, 2025. Business formed between...
Who Is a Beneficial Owner of a Business?
Any business entity that meets the Corporate Transparency Act (CTA) definition of a reporting company must report its beneficial owners in a Beneficial Ownership Information (BOI) report filed with the Financial Crimes Enforcement Network (FinCEN). While some exemptions and exceptions exist, the majority of small and mid-sized businesses formed as LLC, Corporations, and other registered entities are subject to the reporting rule. The Definition of a Beneficial Owner The CTA identifies a beneficial owner as an individual who either directly or indirectly exercises substantial control over...
Can You Use a UPS Store or PO Box for a Registered Agent?
It may seem very appealing to use a UPS store or PO Box for your registered agent, but this comes with a lot of risks. And in some states, this action can result in the closure of your business. Let's walk through what a registered agent is and why opting to use a USP Store or PO Box for your registered agent is not the best course of action. Who Needs a Registered Agent? A registered agent is a person or company with the authority to accept service of process (legal documents and government notices) on behalf of a company. You will most likely need a registered agent if you own one of...
How to Properly Handle Your Company’s Annual Meeting Minutes
Businesses that have incorporated as a corporation or formed a limited liability company (LLC) must carefully document their compliance activities. For example, when a corporation holds its annual general meeting (a.k.a, annual shareholder meeting), it must keep a record on file for regulatory compliance purposes. Most states require that C Corporations (including those that have elected for S Corporation tax treatment) hold a general meeting for their shareholders every year. Usually, they are also required to hold at least one meeting with their board of directors yearly. Businesses...
12 Steps for Closing a Corporation by Year End
As difficult as it may be to make the decision to close a business, things can become even more challenging if a business’s owners don’t tie up all the loose ends. If you’re thinking of closing your corporation by year-end, realize that there’s more to the process than halting the sale of products and services. Merely stopping business activities doesn’t officially close a company, there are steps that must be taken to legally end the business entity’s existence. The exact actions a corporation’s owners must take will depend on where the business is located, whether it has employees, or...
12 Steps for Closing an LLC Before Year End
If you’re thinking of closing your LLC before the year ends, you may be feeling overwhelmed. And you are probably wondering what you must do to exit the business without leaving any loose ends behind. Indeed, there is more to shutting down a business than merely ceasing to sell products and services. The exact actions a Limited Liability Company’s members must take depend on where the business is registered, whether it has employees on its payroll, and other factors. It can be tricky to determine all the requirements, so LLC owners (a.k.a. members) should carefully research the things...
Why Your Inactive Business is Probably Costing You Money
Someone once told me that a true sign of a successful entrepreneur is the ability to know when it’s time to throw in the towel and move on. One failed business doesn’t define an entrepreneur. Plus, when one door closes, another usually opens. Closing a business doesn’t just mean selling your assets and calling it a day. You’ve got to go through the requisite steps to ensure your business is legally closed and that you’ve properly wound up your business affairs. Otherwise, you could be personally responsible for filing annual reports, filing state and federal tax returns, and maintaining...
How to File an Annual Report for an LLC
An LLC annual report is a form that most states require domestic and foreign Limited Liability Companies to submit each year or biennially. A critical compliance task for keeping a business entity in good standing, filing an annual report updates the state on an LLC’s essential information, such as its principal business address, the names of its members or managers, and its registered agent details. Knowing when and how to file an annual report for your LLC is an important part of keeping your business in compliance. Let's review the steps, so you stay in good standing. Keep in mind, the...
Do I Need to Renew My LLC Every Year?
Registered Limited Liability Companies (LLCs) are required to renew their registration, which is an important step in remaining compliant with applicable laws and regulations. Nearly every state calls for some type of renewal filing for LLCs and renewal requirements vary significantly from state to state. Colorado, for example, mandates that an LLC renews annually at the end of the month in which it was formed. Indiana also requires renewal at the end of an anniversary month, but only every other year. LLCs in Maine must file annually by June 1, while the due date in Maryland is April 15...
Corporation Annual Shareholder Meeting Requirements
If your business is set up and registered as a Corporation, you’re required by law to hold an annual shareholder meeting and to document the meeting with minutes. Annual shareholder meetings, sometimes referred to as annual general meetings, are intended to give shareholders an opportunity to learn about a company’s financial situation, obtain updated concerning business goals and any proposed changes in leadership or policy, elect new members to the Board of Directors, and vote on other issues affecting the company. Shareholders, as you know, are the people, companies, or institutions...
The Purpose of BOI Reporting
Why does FinCEN need a BOI report? Could the purpose of BOI reporting be so great that businesses across the USA have to file yet another report with the government? That’s the question many business owners have been asking since the Corporate Transparency Act of 2021 enacted the Beneficial Ownership Information Reporting Rule, which went into effect in January 2024. The purpose of the BOI report is to inform the federal government about the real people who ultimately own or control businesses. The greater purpose of the BOI report is to help identify and safeguard against: Tax evasion...
Benefits of Forming an LLC
The Limited Liability Company (LLC) business structure is a popular choice for entrepreneurs who want to protect their personal assets, enjoy tax and management flexibility, and keep corporate formalities to a minimum. In this article, I’ll discuss the main benefits of creating an LLC to help you understand why so many business owners choose this entity type for their companies. 7 Top Advantages of Registering an LLC 1. Simplicity The business registration paperwork to form an LLC is minimal, as are the ongoing filing requirements. It’s second only to the Sole Proprietorship and General...
What Is Reasonable Compensation for an S Corporation?
Operating a business as an S Corporation can provide some tax advantages for a company and its shareholders, but it also means complying with rules imposed by the Internal Revenue Service (IRS), including the need for employees to be given “reasonable compensation” for their work. There is a lot to unpack about S Corporations and the IRS rules that apply to them. Understanding some things about Limited Liability Company (LLC) and C Corporation taxes first can help you grasp how the S Corporation election works and why business owners might choose that option. In this article, I’ll cover...
Annual Report Requirements
Are you confused about your business' annual report requirements and if you need to complete one? You're not alone. Requirements for annual reports vary by state, so they can be a little intimidating for the average business owner. If your business is a Limited Liability Company (LLC), Corporation, Nonprofit Corporation, Limited Partnership, or Limited Liability Partnership, you will probably need to file an annual report with the state in which the business is registered. If your company is registered as a foreign entity in one or more states other than that in which it was formed, you...
Understanding the Various Types of LLCs
While you are familiar with the Limited Liability Company business entity, you may not realize there are different types of LLC business structures. In a recent live presentation to accounting and tax professionals, our own Amanda Beren walked through what an LLC is and the different types of LLCs in the U.S. If you missed it, fear not! You can watch it and I will cover the details in this article. The LLC is among the most popular entity types for many reasons. Still, before registering any entity, it’s critical for business owners to understand the nuances of the business structure so...
The Ultimate Buying a Business Checklist
If you aspire to start a business but are hesitant because of the risks, you’re wise to be cautious. According to recent U.S. Bureau of Labor Statistics data, nearly one in four new businesses fail within their first year of operation. But fear of failure doesn’t have to hold you back from your dream of owning your own business. Many entrepreneurs opt to buy an existing business instead of launching their own from scratch. Purchasing an established company can improve the chances of success for a variety of reasons: Financial history – With historical financial data about the business,...
Do I Need to Register an LLC and Obtain a Business License?
Many entrepreneurs assume that after going through all the steps of setting up and filing a Limited Liability Company (LLC) with the state, they’re free to begin doing business. While that assumption is understandable, it’s not correct. Before you can hang out your shingle and begin interacting with customers, you’ll need to obtain the business licenses you need to operate legally. You could need one or more business licenses at the federal, state, or local level—or possibly from two or even all those jurisdictions. A big part of owning and managing a business is being attentive to...
What to Expect When Selling Your Business
Deciding to sell a business you’ve worked hard to start and build is seldom an easy or hastily made decision, but the truth is that it happens all the time for a variety of reasons. Why would anyone want to sell something they’ve created? Maybe you are a serial entrepreneur at heart and you intended to grow the company to a certain point and then sell it, so you could make a profit and move on to another venture. Maybe you’ve had the business for a long time and you’re ready to retire and slow down so you can travel or spend more time with family and friends. It could be that you and a...
Should You Incorporate at Year End or Wait Until 2025?
Should you incorporate year end or next year? It may depend on the state where a business is located and if the option of a delay effective date exists.
Advising Clients About Business Structures
With all the decisions your clients are expected to make when starting a business, which legal structure to choose might not get as much consideration as it should. Most business owners choose to form a sole proprietorship in the beginning, since it’s less paperwork and less costly; many switch entities as their business grows to benefit from the protections provided by a Limited Liability Company (LLC) or C Corporation. But an LLC or C Corporation can also choose to elect S Corporation status. If your clients come to you with questions about this option, here’s what to know: The C...
Incorporating a Business 101
As a business owner, the day will come when you inevitably will have to address the legal aspects of your business – and the sooner the better. And, fortunately, the process can be relatively painless and hassle-free. I talk to countless small business owners and freelancers who consider themselves too small to worry about incorporation. After all, you don't have mazes of cubicles…you may not even have any employees. However, incorporation can still be a smart idea even for the self-employed graphic designer or wedding planner and in this post we discuss the benefits of incorporating your small business.
Annual Report List by State for LLCs and Corporations
Many state governments require LLCs, Corporations, and other registered business entities to file annual reports each year. And some Secretary of State (or comparable agency) offices may require these types of reports to be filed according to different timeframes (e.g., biennial and decennial reports). This state-by-state list will help you prepare and stay in compliance.
Consequences of Not Filing a BOI Report
By now, you’ve hopefully heard about the beneficial ownership information report that many businesses must file before the year's end. The BOI report is filed with the Financial Crimes Enforcement Network (FinCEN) and it is designed to document information about the owners of companies within the USA. Businesses that are required to file BOI reports are called reporting companies and they meet certain reporting due dates depending on when they were created or registered. Reporting companies that do not file a BOI report by their due date are subject to severe civil and criminal penalties,...
S Corporation vs. LLC
Limited liability companies (LLCs) and S Corporations are business structures that provide liability protection for business owners and allow for pass-through tax treatment. While they have those things (and some others) in common, they differ in several ways, too. If you’re starting a business or considering changing from a Sole Proprietorship or General Partnership to an S Corporation or LLC, it’s critical to understand the similarities and differences. Every business and business owner’s needs are unique in some respects, so I encourage entrepreneurs to do research on their own and...
Start a Small Business in Texas in 10 Steps
The Lone Star state attracts entrepreneurs because of its business-friendly environment, minimal tax burden, reasonable cost of living, robust infrastructure, and other factors. If you’ve been wondering how to start a small business in Texas, this article will walk you through some of the most important steps. As you explore entrepreneurship opportunities in Texas, make sure you seek the legal, accounting, and tax advice you need from licensed professionals. This article is for informational purposes only and is not meant as legal, tax, or financial guidance. 1. Write a Business Plan Have...
Can You Have Multiple Businesses Under One LLC?
There may come a time when you decide to expand your business into an additional area of focus or take an online business to a storefront (or vice versa). These shifting operations lead business owners to wonder if they can have multiple businesses under one LLC. The short answer is, yes, you can operate multiple businesses under one LLC. However, before you jump in, you have multiple options to consider. The route you choose can impact you in several ways (including your liability and tax obligations), so it's critical to do your homework and weigh the pros and cons. I recommend talking...
Increasing Client Satisfaction in Accounting Firms
What if you could increase customer satisfaction while increasing your revenue and profits? Even better, what if you could accomplish both objectives without increasing your workload or adding staff?In a recent webinar, we explored the benefits of helping clients manage the burden of incorporation, LLC formation, registered agent services, and annual compliance requirements. We also explored CorpNet’s Partner Program and showed how CPAs, accountants, and bookkeepers can easily add these services to their existing advisory offerings. I answered some excellent questions from the audience at...
