The Launch Blog: Expert Advice from the CorpNet Team
How to Change Your Business Entity
It’s not unusual for an entrepreneur to change their business from one entity type to another. Most often, someone who’s been running a Sole Proprietorship or General Partnership sees a need to register their business with the state and become either a Limited Liability Company (LLC) or a Corporation. This could occur because owners wish to lower their risk for personal liability if the business is sued or can’t pay its debts. Tax considerations are another reason for changing a business structure, as is an increased ability to attract investors and raise capital for the business. Or...
Year End Small Business Tax Tips to Reduce Tax Payments in 2025
Before you let the hustle and bustle of the holiday season take over your business (and your life), now’s a good time to review your financial situation and explore some money-saving small business tax tips. Below is a list of my top tax tips entrepreneurs can still benefit from at year-end. 1. Deduct Startup Expenses Did you start your business this year? You may be able to claim some of your startup expenses on your tax return in the year you actually opened the business. To qualify as a startup expense (a capital cost), the IRS requires the expense to meet two requirements: The expense...
Incorporate Before Year End to Avoid Issues at the Secretary of State
Think you’re the only business owner who wants to incorporate or form an LLC before the end of the year with your Secretary of State? Think again. Registering a business at the end of a calendar year can take longer than any other time of the year. Because everyone waits until the end of the year to change their business structure for the New Year, there's a lot of competition. What might normally take just a few weeks to get approved can take a lot longer. Waiting until December to register your business with the Secretary of State could mean your application gets backed up into February...
Should You Incorporate at Year End or Wait Until 2025?
If you’re gearing up to incorporate and get your business off the ground at the start of 2025, you might wonder when to file your business formation paperwork. Can you submit your incorporation forms now and request an effective date that is delayed? After all, the end of December tends to be ultra-busy. Trying to complete all the forms and manage all the details amid that chaos will only compound the stress. Choosing the right business entity type for your business is a critical decision, and so is determining when to file your forms with the state. In this article, I’ll give you...
Maintain Business Compliance to End the Year in Good Standing
As we move into the fall and winter months it's time to begin thinking of year-end compliance responsibilities and business activities. We'd like to help you prepare for the year-end and we want to help you get all your legal ducks in a row. To assist in these efforts, we’ve put together a year-end compliance checklist to set you on the right path. And to make the entire year-end compliance process as easy as possible, we've also created an annual compliance checklist you can download in a PDF (see below). File Your Annual Corporate Documentation Most states require registered C...
What is a Domestic LLC?
If you registered your Limited Liability Company in the state where you live and you are conducting most of your business in this state, your company is known as a Domestic LLC. It is licensed by the state to do business there and expected to uphold all the laws and regulations imposed by the state. While the definition of a Domestic LLC is straightforward, it’s important to understand there are variations on this type of business structure, such as a single-member or multi-member LLC or a member-managed or manager-managed LLC. And, depending on its purpose and how it’s registered, a...
BOI Filing Requirements: What Is Needed?
Companies required to file a Beneficial Ownership Information report (ROIR) under the Corporate Transparency Act must share information with FinCEN about their reporting company, beneficial owners, and company applicants. If you're filing the BOI report yourself, the process can feel a little confusing. As you progress through the form fields, you can't help but notice you are inputting the same data over and over again. In reality, you are, but the reason for this is you are answering questions on various parties involved and information can overlap. What details must be included in the...
Do I Need a Certificate of Good Standing for My LLC?
If you want to open a business bank account for your Limited Liability Company (LLC), apply for a loan or a line of credit, or conduct certain other types of business, you’ll probably need a Certificate of Good Standing, also known in some states as a Certificate of Status, Certificate of Authorization, Certificate of Existence, or Certificate of Subsistence. A Certificate of Good Standing is a document issued by the state to companies in compliance with all applicable rules and regulations. The document typically includes the name or entity number of the business to which it’s issued,...
Traditional LLC vs. Close LLC
A Close LLC and a traditional LLC are essentially the same regarding how they’re formed, the personal liability protection they provide to business owners, and the tax flexibility they provide. A traditional LLC and a Close LLC have the following similarities: Both Close LLCs and LLCs are created by filing a formation document called articles of organization (or certificate of organization) with the state. Both Close LLCs and LLCs limit the LLC members’ personal legal responsibility for the liabilities of their business. Both Close LLCs and LLCs may choose one of the following tax...
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 Is 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...
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 to 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...
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 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...
Do Inactive Business Entities Need to File a BOI Report?
Some business owners have expressed confusion over whether they must file a beneficial ownership information (BOI) report if their business entity ceased to exist before the BOI reporting requirements took effect on January 1, 2024. Fortunately, the Financial Crimes Enforcement Network (FinCEN) has finally provided some clarity on the topic! Here is a summary what you need to know about reporting for inactive businesses: If a business entity ceased to conduct business and formally dissolved before January 1, 2024, it was never subject to the BOI reporting requirement. Therefore, it does...
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...
