When you’re faced with the daily challenges of operating a business, details concerning compliance issues can easily be overlooked. You should be aware, however, that allowing that to happen can result in serious consequences.

Once you’ve registered your Corporation, Limited Liability Company (LLC), or other business entity registered with the state, you’re responsible for complying with all applicable rules and regulations. Doing so is known as business compliance, or corporate compliance if your business is a corporation.

Remaining in compliance enables you to run your business normally and take advantage of benefits such as limited liability protection, being able to expand into another state, renew permits or licenses, buy business insurance, and transfer ownership of the business.

A business that complies with all requirements is considered to be in good standing with the state, which issues the business a Certificate of Good Standing. The name of the document varies depending on the state and may be called a Certificate of Existence, Certificate of Subsistence, a Certificate of Authorization, or Certificate of Status.

If your business doesn’t maintain good standing, operations could be disrupted and you could lose access to the business advantages mentioned earlier. That’s not an ideal scenario and one that you should work diligently to avoid. Let’s start by taking a closer look at the requirements you may need to meet to obtain and remain in good standing.

What Is Required for Good Standing?

Again, the specifics of what is necessary for a business to remain in good standing are different from state to state, and sometimes even from one municipality to another. Requirements may vary depending on the legal structure of your company and where you’re registered to operate your business.

For a business to remain in good standing, it normally needs to file the necessary reports and pay all applicable fees to the state’s Office of the Secretary of State or corresponding agency. There may be other requirements, as well, including those outlined below. By not adhering to these rules, the business risks losing its Certificate of Good Standing.

1. Maintain a Registered Agent

A Corporation or LLC that’s registered with the state must have a registered agent, which is sometimes referred to as a resident agent or agent for service of process. A registered agent is necessary in every state in which the Corporation or LLC conducts business.

A registered agent is recognized by the state as someone able to accept service of process on behalf of your business, meaning the agent will receive important paperwork and any legal notices and make sure they are forwarded to you. When you file your Articles of Organization or Articles of Incorporation with the state, you’ll be required to include the name and address—a street address, not a post office box—of your registered agent.

A registered agent can be a member of the company who uses the location of the business as the designated address, or a lawyer, accountant, tax preparer, or even a family member or friend who resides in the state. These are known as noncommercial registered agents.

Or an LLC can hire a commercial registered agent to receive all business and legal correspondence and forward it electronically in a seamless manner. Commercial registered agents file a special listing statement with a state agency responsible for business filings and compliance—usually the Secretary of State. That listing statement facilitates communication between the registered agent and the Secretary of State, assuring that documents critical to your business will get to the proper place in a timely manner. Noncommercial registered agents do not file a listing with the state.

2. File an Annual Report

Most states require Corporations and LLCs to submit an annual report, sometimes called a statement of information. The report is submitted to the Secretary of State and includes updated business information. If your company’s location has changed or you’ve elected new officers, those updates would need to be included in the report.

There’s a fee to file an annual report, which varies depending on your state. In New York, for example, it costs only $9 to file a report, while in Delaware, Maryland, and the District of Columbia the fee is $300. Some states require this report to be filed every other year instead of annually, and a few states do not require it at all. Due dates for filing the report vary but are usually based on the anniversary of your incorporation date, the end of the calendar year, or when your annual tax statements are due. You can check the requirements specific to your state on its website.

3. Pay Your Taxes

In addition to federal and state income taxes, you and your business may be responsible for sales tax, payroll taxes, excise tax, and/or franchise tax, which is a tax some states charge certain businesses for the right to exist as a legal entity and conduct business there. It’s extremely important to be aware of all taxes that apply to you and have a plan on how you’ll pay them in a timely manner.

4. Renew Business Licenses and Permits

It’s likely that your business is required to have some sort of license or permit to operate legally. While your business is registered with the state, some businesses may also need federal, county, or local licenses and permits to operate. You’ll need to research which business licenses and permits you’ll need by checking websites and remember to find out about renewal requirements. Operating without the required licenses and permits can put your business in jeopardy.

5. Keep Yp With Corporate Meeting Minutes

If you’re running your business as an S Corporation or C Corporation, you’ll need to record minutes from your corporate meetings, as doing so is required by most states. You’re not required to submit the minutes to the state, but they should be kept with corporate records, as they are important for protecting the company’s limited liability status and keeping track of business proceedings.

Corporate minutes should capture details such as the date, time, and place of the meeting, who attended, who served as chair, actions taken, decisions made, the signature of the person recording the minutes, and the date the minutes were issued.  If you’re in charge of recording meeting minutes, check online for a meeting minute template. A variety of them are available and they can simplify preparation.

6. File a DBA

If you’re conducting business under a company name that’s different from the name you filed with the state, you’ll need to register a DBA, or Doing Business As. Also called a trade name or fictitious name, a DBA can be a variation of the registered name of your company or a completely different name. DBAs can be useful if you have a diverse line of offerings and want to market different products and services under different names, or if you’re expanding into a new area of business. You may be required to advertise your DBA name in a local newspaper or legal publication.

7. File Articles of Amendment if Needed

If you change the name of your company, get a new registered agent, change your business address, or have changes on your Board of Directors, you must officially notify your state by filing Articles of Amendment. These are required in most states in addition to annual reports, which also would note these types of changes. Again, requirements of what information must be reported and how reports should be completed and filed vary from state to state, so you’ll need to check to see what applies to you.

Update your BOI Report. If you file Articles of Amendment to report business changes, you’ll also need to file an updated Beneficial Ownership Information (BOI) Report. BOI reports are required of most small businesses that are registered as Corporations or LLCs. They name the beneficial owners of the business and include details about the company, including name and address. If any pertinent information changes on the Articles of Amendment, you’ll need to update the BOI report. The report goes to the Financial Crimes Enforcement Network, which uses the information to confirm that the business isn’t a front for money laundering or another crime. Failure to file a BOI report can result in severe penalties, so be sure to pay attention to this important requirement.

8. Keep Business and Personal Finances Separate

Regardless of the type of business you have, maintaining separate business and personal finances is critical, as not doing so can threaten your limited liability status, make filing taxes more difficult, and cause other problems.

According to the U.S. Small Business Administration, you should establish and maintain separate personal and business bank accounts; use a business credit card that allows you to track expenses, analyze spending, and build your business credit; set up separate utility accounts for home and business; and apply for credit with a supplier or vendor in the business’ name.

9. Register Your Business in Each State Where You Conduct Business

If you’re a Limited Liability Company (LLC) or Corporation and planning to conduct business in a state other than the one in which your company was formed, you’ll need to register the company in the state or states you’re expanding into. This process is known as foreign qualification, with “foreign” referring to a state other than where the business was started.

To register to do business in another state you’ll need to apply for a Certificate of Authority to prove you’re qualified to do business there. What constitutes “doing business” in another state varies, so you’ll need to do some research or check with a legal consultant to see if it’s necessary for you to foreign qualify. And requirements for how to foreign qualify vary from state to state, so check with the Secretary of State to learn more.

I know that’s a big checklist of tasks necessary to ensure you remain in good standing with your state, but I can’t stress how important it is to maintain compliance by following each of those directives. If you’re feeling overwhelmed and need help, you can hire reliable, professionals to help you navigate.

What Are the Consequences of Non-Compliance?

Failing to meet the requirements listed above, or any others that might pertain to your company, can result in loss of good standing and cause of variety of problems and issues, ranging from not being able to foreign qualify in another state to jeopardizing your ability to get approval for business financing. Let’s consider some of the things that can happen if your business loses its good standing status.

• Difficulty securing capital – A business that is not in good standing may find it very difficult to get a loan or obtain financing from a bank or other lending institution because the institution will consider the business to be high risk.
• Tax liens – If you’ve lost good standing status for not paying taxes, the IRS or a state or local taxing authority can impose a tax lien on your business. The tax lien acts as a legal claim against the assets of the business, including real estate, bank and investment accounts, intellectual property, and physical property. If the matter is not resolved, the IRS or another government agency can seize your property and sell it to pay off your tax debt. Someone who runs a business that’s not registered with the state risks having personal property seized, as well, as they do not benefit from limited liability protection. In addition to putting your property at risk, your business credit score can suffer as a result of a tax lien, making it harder to obtain funding in the future.
• Inability to bring a lawsuit – A company that’s not in good standing with the state may not be able to bring a lawsuit there. If you wanted to sue someone for breach of contract or to obtain monetary compensation, you may not be able to do so until good standing status has been restored.
• Loss of the right to its business name – A company that’s not in good standing risks losing the right to use its registered name in the state, as another business could claim the name as its own before the non-compliant company is able to reclaim good standing.
• Piercing of the corporate veil – While members of LLCs and Corporations are largely shielded from personal liability, that protection is not airtight. In certain instances, a court can rule in favor of piercing the corporate veil, which eliminates the limited liability of the business and holds its officers, members, and directors personally liable. There are specific reasons that a court would rule to pierce the corporate veil, including commingling business and personal funds and assets, engaging in criminal activity, or taking out loans you know cannot be repaid.
• Fines and penalties – States can levy fines and penalties on businesses that have not complied with regulations and led to the loss of good standing.
• Administrative dissolution or termination of the business – In worst-case scenarios, a state can remove a company’s right to conduct business, effectively shutting it down. Although this action can often be resolved, it causes problems and disruptions, can damage the reputation of a business, and results in hefty fees for legal assistance.
• Increased risk of business identity theft – With the incidence of business fraud on the rise, it’s not that uncommon for business identity thieves to examine state records and identify companies that are not in good standing. Assuming the business is in disarray, the thieves seize the opportunity to steal the company’s identity to borrow money, purchase items, or get access to bank accounts.

Here’s the Good News

The good news is that remaining business compliant and keeping your good standing status isn’t difficult if you remain vigilant and up to speed with any regulations that apply to your company.

More good news is that if your business does fall out of good standing, there are steps you can take to resolve the compliance issues and get your good standing status reinstated. You’d need to identify any fees owed to the state and repay them, pay all taxes and penalties, obtain and complete any necessary forms, and take whatever other steps are needed.

If you’re not sure of the status of your company, you can do a search on your state’s Secretary of State website and view information about your business, including whether it’s in good standing.

While none of these tasks is overly difficult, navigating the regulations and procedures can be confusing. If you’re having trouble determining the status of your business, figuring out how to remain in compliance, or wondering how to return to good standing status, a qualified professional can help.

If you’re planning to close your business—either close it altogether or close it in one state and move it to another—there’s a process you must follow. The exact requirements and process can vary depending on your entity type, state, location in the state, the types of products or services you provide, and other factors.

In this article, I’ll break down the key considerations by business structure to give you an idea of what’s involved. For more information about the tasks you’ll need to address when winding up your business, talk with your attorney and accountant for guidance specific to your situation.

Closing a Sole Proprietorship

Sole Proprietorships are non-entities—they have no legal separation from the business owner and are not registered with the state. For income tax purposes, Sole Proprietorships are considered the same taxpayer as their owners. They report business income on their personal tax returns. Therefore, the typical process for dissolving a Sole Proprietorship is relatively uncomplicated.

1. Inform vendors, creditors, customers, and employees that you plan to close the business.
2. Collect money owed and pay off your debts.
3. If you sell company assets, file the IRS tax form to report sales of business property.
4. Issue final paychecks and make final tax deposits if the Sole Proprietorship has one or more employees.
5. Pay final sales taxes, if applicable.
6. Make final quarterly self-employment deposits to the IRS, state, and local tax authorities. (Sole Proprietors are self-employed individuals and are not on payroll like other company employees.)
7. Cancel federal EIN, payroll accounts, business licenses, and permits.
8. File the form to cancel your DBA (Doing Business As) if you registered with the county or state to use a fictitious name.
9. Close business bank and credit accounts.

Closing a Partnership

Partnerships are also non-entities, and business owners follow the general same steps that apply to Sole Proprietorships—with a few additional tasks.

1. Get partner consensus to close the business. (Partners must agree to close the business. The company’s Partnership agreement should provide the details of what happens when the business closes, including how the assets and liabilities will be divided among the partners.)
2. Let customers, vendors, creditors, and employees know you plan to close your company.
3. If customers owe you money, collect it from them. Also, pay off any outstanding debts.
4. Sell company assets and file IRS tax forms to report sales of business property.
5. Pay employees what you owe them and make final tax deposits if your Partnership has employees.
6. If you sell taxable products or services, report and pay the final sales tax due.
7. Make final quarterly self-employment deposits to the IRS, state, and local tax authorities. (Partners are self-employed individuals and are not on payroll like other company employees.)
8. Submit your final federal, state, and local partnership tax returns. The federal return is generally due three months and 15 days from when the business is dissolved. State and local final return deadlines vary.
9. Cancel federal EIN, payroll accounts, business licenses, and permits.
10. If conducting business under a fictitious name, cancel your DBA.
11. Distribute remaining assets among partners.
12. Close business financial accounts (e.g., bank and credit cards).

It’s crucial to check with your state’s Secretary of State about any state regulations regarding Partnership closures. Depending on the state and the type of Partnership, the business may need to file a Statement of Dissolution (or similar form) to officially dissolve the company.

Closing a C Corporation

Unlike Sole Proprietorships and Partnerships, C Corporations must be registered with the state in which they are formed by filing Articles of Incorporation (called Certificate of Incorporation or by another name in some states). That formality separates a C Corporation from its owners legally and for tax purposes (the company reports and pays taxes on business income). To end a  C Corporation’s existence, it must be officially closed by following its state of formation’s dissolution process.

Before dissolving the business, the Corporation must be in “good standing,” which means its ongoing compliance obligations—such as paying state taxes and filing timely corporation documents—are up to date.

C Corporations are separate taxpaying entities, and owners/shareholders are W2 employees of the corporation—which is why the owners have limited liability from the company’s debts and legal responsibilities. C Corporations must have a board of directors, hold annual meetings, keep meeting minutes, and draft bylaws by which they operate. When deciding on dissolution, the corporation’s board must have a meeting and vote to close the business. The board’s secretary must record the decision in the meeting minutes, and all voting board members must sign the document. If the C Corporation has shareholders, a majority of them must vote in favor of closing the business. That percentage varies by state, with many states requiring two-thirds of the voting shareholders to sign off on dissolving the business.

From there, these are the general steps that follow when closing a C Corporation. The following steps also apply to C Corporations that have elected S Corporation tax treatment:

1. Notify customers, vendors, suppliers, creditors, and employees that you plan to dissolve the company.
2. Collect money owed and pay outstanding debts.
3. File Articles of Dissolution (sometimes called Certificate of Termination or Certificate of Dissolution) with the state, usually through the Secretary of State office.
4. File Corporate Dissolution or Liquidation (Form 966) with the IRS (applicable if the entity is a C Corporation or an S Corporation that was previously a C Corporation). Form 966 is due 30 days from business closure.
5. Sell business assets and file IRS tax forms to report sales of business property.
6. Issue final paychecks to employees and file final payroll taxes.
7. Report and pay any sales tax owed on the sale of taxable products and services.
8. Distribute remaining assets to shareholders.
9. Submit your final federal, state, and local corporate income tax returns. The federal return is generally due four months and 15 days from when the business is dissolved—if S Corporation tax treatment has been elected, then the federal return is generally due three months and 15 days from when the business is dissolved. State and local final return deadlines vary.
10. Cancel federal EIN, payroll accounts, business licenses, and permits.
11. Close business bank and credit accounts.

Closing a Limited Liability Company (LLC)

LLCs are also state-registered (via filing Articles of Organization) and regulated entities. They are legally separate from their owners (called members). In a Limited Liability Company, depending on state guidelines and the steps outlined in the company’s LLC operating agreement, a meeting must be held to vote on dissolution.

Once the decision to dissolve has officially been made, closing an LLC requires many of the same steps as C Corporations.

1. Let customers, employees, suppliers, vendors, and creditors know that you plan to dissolve the LLC.
2. Collect money owed from customers and pay any outstanding business debts.
3. File Articles of Dissolution with the state.
4. Sell the LLC’s business assets and file the appropriate IRS tax forms to report sales of business property.
5. Distribute final employee paychecks and file final payroll taxes.
6. Report and pay sales tax that you owe for selling taxable products and services.
7. Distribute remaining assets to LLC members.
8. Report and pay final quarterly self-employment deposits to the IRS, state, and local tax authorities. (LLC members are self-employed individuals and are not on payroll like other company employees.
9. Submit your final federal, state, and local LLC income return. The federal return is generally due three months and 15 days from when the business is dissolved. State and local final return deadlines vary. If S-Corporation tax treatment was elected, then submit final federal and state S Corporation income returns.
10. Cancel state and local payroll accounts, business licenses, and permits.
11. Close the LLC’s financial accounts (e.g., checking account, savings account, and credit cards).

Moving a Business to Another State

Although Sole Proprietorships and Partnerships can operate in multiple states, most that move their businesses to another state close them first in the existing state.

Corporations and LLCs have a more formal process to follow when relocating or expanding the business to a new state.

Ultimately, they will either:

1. Dissolve the company in the original state and register it in the new state, or
2. Continue to operate the business in its state of formation and file for a foreign qualification in the new state.

Doing Business as an LLC or Corporation in Multiple States

Foreign qualification is wise if the company plans to do business in its original state and another state. Each state has its own process for foreign qualifying an entity. Most require filing a Certificate of Authority and paying the applicable fee. When registering an LLC or C Corporation in a new state, the company must also designate a registered agent there. Registered agents must have a local address and the authority to accept legal documents and government notices in that state.

Closing an LLC or Corporation in its Home State and Moving It to Another

If a business ceases operations in its existing state and physically moves to another state, it will typically follow the business dissolution process in the former state and register as a new entity in the new state.

Alternatively, some states offer domestication (sometimes called redomestication or redomiciliation) to change the company’s state of formation. Domestication alleviates the burden of completely starting over in the new state. After domestication in the new state, the company no longer exists in the former state.

In states that allow domestication, companies must submit filings in the state they are leaving and the one where they wish to relocate their domicile.

Here’s what the domestication process typically looks like:

1. The business owners provide the following documents to the new state
   • Certificate of Good Standing from the current home state (or certified copies of all home state documents)
   • Articles of Domestication (or Certificate of Conversion or similar document) to transfer the entity to the new state
2. Once the new state approves the LLC’s or Corporation’s domestication, the company either files to dissolve or domesticate out of the former home state, depending on the state’s specific requirements.
   3. Upon completion, the company has officially moved and no longer exists in its original state of registration.

At the time of this writing, 34 states and Washington DC allow redomestication in their jurisdictions, so it’s important to check with your attorney about whether that’s an option for you.

The Devil Is in the Details

Tackling all the steps to close or relocate a company requires time and fierce attention to detail. Overlooking required filings or completing them incorrectly can lead to unnecessary costs—and even fines or penalties. That’s why it’s so important to review your responsibilities with legal and tax experts—and consider calling CorpNet at 1-888-449-2638 for assistance with preparing and submitting your critical dissolution filings.

A Doing Business As (DBA) name—sometimes called a fictitious business name, assumed name, or trade name—is necessary when conducting business under a name other than a company’s legal name. DBA laws help protect consumers by ensuring the public has a way of knowing who the individual or company behind a fictitious name is.

You might wonder…if you use your own personal name as your business name, do you need to register it as a DBA name? The short answer is: If the business owner’s name is considered the legal name of the company, then a DBA is not required.

But when is that the case?

Legal Business Name vs. DBA by Entity Type

A company’s legal name is the name by which it is legally allowed to carry out its business activities and enter into contracts. It is the business’s official name that appears on government documents and legal forms. How a company’s legal name is determined depends on its business structure. Business owners may find that their company’s legal name may or may not be adequate for successfully marketing their services and products. In that situation, they may decide to use a fictitious name.

Sole Proprietorships and Partnerships

When a business is owned by one person (or a married couple), it is considered a Sole Proprietorship—unless the owner completes the process of registering it as a formal business entity like a Limited Liability Company (LLC) or Corporation). A Sole Proprietorship and its owner are the same legal entity. Therefore, the legal business name is the owner’s full first and last name, which may have a descriptor added to it to describe the business activities, such as “June Ramirez Graphic Design” or “Cody Owens Lawn Care.” Many of the nearly 30 million businesses that operate as Sole Proprietorships in the United States choose to use their owner’s name as their business name, but others may find that doing so limits their branding potential. Registering to use a fictitious name allows the business owner to market their services or products under a name that does not include their first and last name. It enables them to get more creative with their business branding. For example, June Ramirez might file a DBA for the name “Pinnacle Marketing Design” for her graphic design business and Cody Owens might use the trade name “Good-n-Green Lawn and Landscape Care” for his lawn care company.

If a company has multiple owners and hasn’t registered as a formal business entity, it is considered a General Partnership. A General Partnership’s legal name must include the last names of each of its owners—for example:  “Lee, Johnson, and Patel IT Consultants.” If the owners prefer a catchier name, they might file a DBA for something like “Triple Peace of Mind IT Consulting.”

As you can see, registering a fictitious name gives Sole Proprietorships and General Partnerships more control over how prospective customers might perceive their brand—and how memorable the brand will become.

LLCs and Corporations

An LLC or Corporation’s legal name is the one that appears on the entity’s formation documents filed with and approved by the state. LLCs and Corporations do not have to include their owners’ names in their legal name. So if our hypothetical sole proprietor June Ramirez forms an LLC, she could register “Pinnacle Marketing Design, LLC” as the company’s legal name in the Articles of Organization she submits to the state. (Of course, she should first do a business name search to make sure the name isn’t already taken by another business entity.) Likewise, if our hypothetical partners Lee, Johnson, and Patel decide to incorporate as a C Corporation, they could establish “Triple Peace of Mind IT Consulting, Inc.” as their entity’s legal name. In either case, no DBA would be required to use those names even though they do not contain the owners’ names.

However, if an LLC or Corporation intends to conduct business using a name other than the entity’s legal name, it must file a DBA. This is true whether the name is completely different or a variation of the legal name. For example, if Triple Peace of Mind IT Consulting, Inc. wants to market its services to mitigate cybercrime risks under “Triple Peace of Mind Cybersecurity Protection,” it must complete a fictitious name registration.

There are several reasons why an LLC or Corporation might want one or more DBAs:

• Operate multiple businesses under a single LLC or Corporation – This is more cost-effective than forming separate entities for each business. However, the LLC or Corporation is responsible for all of those businesses’ legal and financial obligations.
• Operate as a franchisee – Suppose Jane Doe is opening a Rita’s water ice franchise location. She might set up an LLC under the legal name “Doe Enterprises, LLC” and then file a DBA for “Rita’s Italian Ice” (or another name allowed per her franchise agreement).

DBA Name Restrictions

States’ rules vary about what can or cannot be included in a business name. Their restrictions are meant to prevent the public from being misled. For instance, a fictitious name cannot include words, acronyms, or abbreviations like Corporation, Limited Liability Company, Inc., or LLC because it would give a false impression that the DBA name is a registered business entity. Likewise, terms that imply a company is a governmental unit—such as Federal or United States— are generally forbidden.

Examples of other possible taboo words include:

• Bank
• Foundation
• Trust
• University
• School
• Law
• Doctor
• Engineer
• Any words that are obscene or that promote illegal activity

If you’d like to learn more about business name restrictions, we have a great article on the subject at Business Name Restrictions: What to Know Before Registering Your Business.

Pros and Cons of Using a DBA

Generally, fictitious name registration involves filing a form with the state’s Secretary of State office. However, sometimes DBA filings are done through the county. When a company files a DBA with the state or county, it must typically place a notice in a local newspaper or legal publication to inform the community of the assumed name and who has applied for it.

There are advantages and disadvantages of fictitious names.

Pros of using a DBA:

• Allows you to be more creative and set the foundation for a memorable brand.
• Adds an essence of professionalism.
• Is less expensive to set up and maintain than a separate business entity.
• Enables entrepreneurs to keep entity compliance obligations simple and cost-effective while marketing different products, services, or business lines under distinct names.
• Offers some privacy for sole proprietors and general partners who don’t want to put their names on display when marketing their business products and services.
• May be used in contracts and on bank accounts. Typically written out as legal business name + DBA or d/b/a + fictitious name. For example, June Ramirez DBA Pinnacle Marketing Design.

Cons of using a DBA:

• Does not guarantee exclusive use of the name.
• Does not provide personal liability protection for the business owner (because a DBA is not a registered business entity).
• Less tax flexibility than a registered business entity.

Discussing your options with an attorney can help ensure you make the right decision for your business.

As a seasoned accounting professional, you have earned your clients’ trust and respect. Because your business clients know they can count on you to handle their accounting and tax matters, they may wonder about other ways you can assist them. For instance, someone might ask if you can help them set up an LLC or handle other business filings.

Fortunately, that’s a perfectly feasible request for CPAs to fulfill. No legal requirement exists for business owners to ask an attorney to file their business formation or compliance documents. If entrepreneurs don’t feel confident about preparing and submitting their own filings, they may ask another trusted resource—such as an accountant—to help them.

How Accountants Can Benefit Setting Up Business Entities

Your CPA firm has much to gain from adding business formation and compliance filings to your offerings:

• Increase customer loyalty and retention – By providing additional services, you will reinforce your role as a trusted and reliable resource. The more you can do for your clients, the more value they’ll find in your business relationship, and the more likely they will stay with you as their company grows and evolves.
• Bring in additional revenue – Accounting firms typically experience a drop in revenue after the busy income tax preparation months have passed. Adding business formation and compliance services generates a new revenue stream with year-round income potential.
• Enjoy a competitive advantage – Your CPA firm will stand out from the competition if you offer a more comprehensive portfolio of business services than other accountants. By handling business filings, you’ll set yourself apart and attract more clients because you can address more of your customers’ needs.

What Other Business Filings Can a CPA Handle for Clients

Filing LLC registration forms is just one of many types of filings you can help clients with to save them time and make it easier for them to start and grow their businesses.

Other formation and compliance services to consider include:

• Incorporation – If your clients want to incorporate as a C Corporation or other Corporate entity, you can help them with their business registration filing.
• S Corporation Election – You can help clients formed as a C Corporation or LLC apply for S Corporation tax treatment.
• BOI Report – Most newly created and existing registered business entities are subject to the Beneficial Ownership Information reporting requirement (which began in 2024). You can assist your clients by completing and submitting the report on their behalf.
• Employer Identification Number (EIN) – You can help your clients by filing their application to obtain their federal tax ID number.
• Doing Business As (DBA) Registration – Assist clients by filing their fictitious name registration forms.
• State Payroll Tax Registration – You can help clients who have employees register for their state income tax (SIT) and state unemployment insurance (SUI) accounts.
• Sales and Use Tax Registration – If clients must pay sales or use tax, you can help them register for those tax accounts at the state or local level.
• Initial and Annual Reports – If clients must submit an initial report or annual report to their state, you can handle those filings.
• Articles of Amendment – Clients must notify the state of major changes to their business entity — such as changing their company name, moving to a new location, shifting the business activities that the company engages in, adding or removing LLC members or a corporation’s directors, etc.
• Registered Agent – Designate a registered agent for your clients’ entities.

How to Get Started Offering Business Formation and Compliance Services to Your Clients

I understand if you’re thinking, “This all sounds great, but I don’t know the first thing about preparing those filings for my business clients?”

Don’t let that prevent you from the opportunity to serve your clients more fully and generate additional revenue for your firm. Consider partnering with a business formation and compliance services company with specialized expertise in handling filings in all 50 states.

The CorpNet Partner Program, for example, gives you two ways to offer formation and compliance services with minimal effort on your part and full support from our filings specialists:

1. Reseller Program – We give you a wholesale discount on our services and you resell them under your own brand at whatever price points you choose—while we serve as your silent fulfillment partner behind the scenes. We do all the work, and you get all the accolades from your clients! Our intuitive portal and dashboard make the process simple and convenient.
2. Referral Program – When you refer clients to us and they sign up for our services, you get a commission for the sale. We collaborate directly with your clients and handle everything from start to finish.

You can even participate in both programs if you’d like to resell certain services while referring clients directly to us for others.

Having a fulfillment partner like CorpNet enables you to expand the breadth of your services without the time and cost of intensive training, infrastructure changes, or excessive workload.

Ready to Be a Hero to Your Clients and Boost Your Revenue?

Become a CorpNet Partner! We offer:

• No cost to participate
• Two ways to participate: Reseller or a Referral partner—choose one or both!
• Support from a dedicated CorpNet account manager with expertise in handling business filings in all 50 states
• Turn-key marketing resources for promoting your business formation and compliance services
• CorpNet Compliance Portal with a dashboard for staying on top of your clients’ compliance responsibilities and due dates

The CorpNet Partner Program allows CPAs, accountants, bookkeepers, and other financial and tax professionals to create an additional revenue stream for their businesses while building trust and loyalty with their clients. By enabling you to resell CorpNet business formation and compliance services — or get a commission when you refer clients to CorpNet — you can augment your income and maintain a steadier bottom line when the crazy-busy tax season has passed.

As a Reseller, you collect the necessary information from your clients, and CorpNet prepares their forms and submits them behind the scenes as your silent fulfillment partner. You get special wholesale pricing on our services and then resell them to your clients at whatever price you choose. As a Referral partner, you direct your clients to CorpNet, and we handle the entire process. We give you a commission (a percentage of the service price) on the sales we obtain from the clients you refer to us.

You may be thinking, “This sounds great, but I don’t have time and don’t want to invest the money in developing all the marketing materials necessary to promote the service offerings.” Fortunately, that need not be a concern! When you become a CorpNet partner, we give you turn-key marketing assets and all the resources you need to assimilate our services into your business model. We recently presented a live webinar on the topic, and I’d like to share that information with you in this article as well.

Marketing Resources for Partners

Your clients have grown to trust you and know they can rely on you for exemplary service. With their confidence in you already established, I expect they will be thrilled to know you can now help them — or refer them to CorpNet for assistance — with registering their entity and handling ongoing compliance filings. With your help, they’ll have more time to concentrate on other essential aspects of their business.

We aim to make it as easy and straightforward as possible for you to roll out our business formation and compliance services to your clients. Whether you sign up for our Reseller or Referral program (or both!), we provide professionally developed marketing collateral to help you get the word out about your new service offerings. Our white-label design allows you to brand the materials as your own — or co-brand them with CorpNet. Ultimately, you choose what makes the most sense for you.

Below, I’ll share the various marketing and promotional pieces we give you when you sign up as a CorpNet partner. If you have any suggestions regarding other materials that would help your efforts, I encourage you to reach out to your account manager.

Marketing Brochures and Checklists

Our brochures provide an overview of all the CorpNet services you can offer your clients, and our checklists give your clients a rundown of the common tasks and requirements they need to fulfill when starting a business. We have these materials branded with CorpNet’s name and contact information (for Referral partners) and white-label versions (for Reseller partners) with logo and contact information areas you can customize with your logo (or co-brand with your logo and CorpNet’s) and company contact information. And if you’d like us to add anything to the brochure’s content, we can make changes upon your request.

• CorpNet Company Brochure
• Service One Page Brochure – CorpNet Branded
• Service One Page Brochure – Editable File for Partner Contact Information and Logo
• New Business Checklist and Brochure – CorpNet Branded
• New Business Checklist and Brochure – Editable File for Partner Contact Information and Logo

Website Content for a Dedicated Services Page on Your Website

Naturally, you’ll want your website to include the services so that your existing clients and prospective customers can learn that you’ve broadened what you can provide. We’ve created a template for website copy, which you can modify as you see fit and include on one of your existing website pages or a new one.

I think you’ll find it quite helpful and time-saving. It provides basic information describing the different business entity types and the services we offer you as our partner.

Formation

• Sole Proprietorships
• Partnerships
• C Corporations
• S Corporations
• Limited Liability Companies (LLC)
• Professional Limited Liability Companies (PLLC)
• Professional Corporations
• Nonprofit Corporations

Compliance

• Business Owner Information Report*
• Doing Business As (DBAs)
• Business Name Searches
• Business Name Reservations
• Assign a Registered Agent
• Obtain a Federal Tax ID Number (EIN)
• Register for Sales and Use Tax
• Register for Payroll Taxes (SUI/SIT)
• Obtain a Business License

*This new reporting requirement (effective January 1, 2024) applies to newly registered business entities that meet specific criteria. Companies created or formed during 2024 have 90 days after their entity is registered to file their BOI report. Those created or formed on or after January 1, 2025, must submit their BOI report within 30 days of registration. Entities created or formed before 2024 are also subject to it and have until January 1, 2025, to submit their BOI report.

Email Copy for Deploying an E-Newsletter to Your Clients

Email is an ideal way to announce to existing clients that you can help them with their business formation and ongoing compliance needs. With our email copy template, you can spread the word without writing content from scratch. Edit the text to meet your specific needs and offerings, include it in your e-newsletter or marketing e-blast, and link it to your website page that describes the services. You can use it as you wish! Whether your recipients use a smartphone, tablet, laptop, or desktop computer, the pre-formatted email will look professional on any device.

Client Questionnaires to Help Clients Determine Their Needs

Every client is different! So, we’ve prepared a set of questions for your clients to complete when they are forming an LLC or Corporation so you can gather important information from them. These questionnaires can also be used for clients with an existing LLC or Corporation who want to move or expand their business into another state.

Your clients’ answers will also help you determine the various formation and compliance services they need. For example, registered agent services, state payroll tax registration, DBA (fictitious name) filing, Form 2253 to elect S Corporation status, etc.

FAQs About the Tax Savings Advantages of LLCs and Corporations

We also provide a list of FAQs you can give your clients to educate them on the different entity types, how they’re treated for tax purposes, and what’s involved in setting them up. You are welcome to brand our FAQs piece with your own logo.

While many entrepreneurs start their companies as Sole Proprietorships or General Partnerships, eventually, they may want to protect their personal assets by forming an LLC or incorporating. These FAQs will help them consider which entity might offer the most advantageous tax outcome. Of course, they are meant as informational resources and not as a substitute for professional tax or legal advice!

Digital Display Banners for Attracting New Clients

For our referral partners who wish to get a commission for sending clients to CorpNet rather than branding our services as their own, we have designed digital banners you can add to your website or social media platforms. You choose the banner you’d like to use and then embed it with the unique referral partner URL we give you. When someone clicks on the banner, it will direct them to the CorpNet website. If the individual places an order, it will recognize our Partner ID, and you’ll get credit for the sale.

As a referral partner, you can take your full commission or use our banners with coupon codes embedded in them to pass a portion of your commission on to your clients as a discount on their orders.

Articles, Webinars, Videos

We are constantly updating our collection of information about everything related to starting and running a business.

Specifically for our partners, we offer webinars and videos on various topics to augment their knowledge and help them feel more comfortable speaking with their clients when reselling or recommending our services.

You will find valuable insight into everything from a deep dive into the LLC structure to how to structure multiple businesses to the 2024 BOI reporting mandate and more.

Also, our website’s Launch Blog covers virtually every topic imaginable, enabling you to augment your knowledge of the services you can sell through our partner program.

One thing I want to mention: As an accounting professional, you must be careful to avoid engaging in the unauthorized practice of law. In other words, do not offer legal advice without a license to practice law! However, you can give insight pertinent to your certified area of expertise and credentials and provide clients with information that helps them come to their own conclusions about what entity might be most advantageous for them. And, of course, you can direct your clients to a licensed attorney for legal guidance.

Interactive Business Structure Wizard Tool

Our Business Structure Wizard is a helpful tool for identifying the most beneficial entity types for a client. After answering the series of questions our tool asks, you can see the best matches. The tool scores each entity type, giving it a percentage score. The higher the percentage, the more likely the business structure will be a good fit. The tool is an excellent starting point for homing in on which business structures to consider.

Feel free to give your clients the link to the Business Structure Wizard so they can complete it themselves, or you can complete it for them while you’re meeting with them face-to-face or over the phone.

Free Business Name Search

When you have a client who wants to start a business or change their existing business’s name, they can check to see if the company name they want to use is available by using our free Business Name Search tool. Like our Business Structure Wizard, the Business Name Search Tool is part of CorpNet’s website and unavailable in white-label format. If you’re a Reseller partners and want only your brand in the spotlight, you can use the tool on your client’s behalf to check business name availability or reach out to your CorpNet account manager, and we can check the name for you.

Performing a business name search is valuable because if another company registered in the state already uses the name your client desires, the state might reject your client’s formation documents — and filing fees are not refundable.

Portal with Compliance Checks

The CorpNet Compliance Portal is your dashboard for staying on top of your clients’ compliance responsibilities and due dates. It provides alerts for when filings (such as annual reports, BOI reports, registered agent renewals, business license renewals , etc.) are approaching. The portal is free of charge, and you incur no fees for the setup and maintenance of your dashboard.

You may have as many clients in the portal as you want. Before we add them to your dashboard, your CorpNet account manager will do a compliance check to determine which ongoing filings and reports each client is responsible for.

You can view them at any time by logging into the portal. You will also receive email notifications when upcoming compliance tasks are nearing their due dates so you can remind your clients of their responsibilities and help complete them.

Because states’ ongoing compliance requirements and deadlines vary, your dashboard simplifies tracking what’s due when for clients regardless of which state — or how many states — their business is located in.

Steps to Maximize Revenue

Now that I’ve covered the marketing and informational resources you have at your disposal, I want to discuss how you can effectively use them to generate income for your company.

1. Determine what CorpNet services you’d like to offer for business formation and ongoing compliance – You can pick and choose! For example, you may decide you’re wholly comfortable branding certain services like filing a DBA and payroll tax registration as your own and reselling those CorpNet services to your customers under your name but would rather refer clients to CorpNet for filing articles of incorporation and dissolutions.
2. Create a website page that lists the services you’re offering – Make it easy for your website visitors to distinguish between which services are related to forming a business entity and which are associated with maintaining compliance after a business is registered.
3. Send an email to your clients (or your marketing mailing list) to introduce them to the services you’re offering – Emphasize that you’ve expanded your offerings to provide clients with convenience and additional value.
4. During your tax planning and preparation meetings, take a moment to introduce your ability to help your clients with their business formation and compliance needs – Give them the brochure and checklist and share the website link so they are aware of how you can help them.
5. Remind your clients when their critical compliance tasks are due and how you can help – This will build trust and make it easier for them to keep their business entity in good standing with the state and tax authorities. Many new entrepreneurs don’t realize they have ongoing entity maintenance requirements and they miss critical deadlines. You can keep them on track!
6. Ask your clients to help you spread the word – Chances are, they’ll be happy to let their fellow business owners know you can save them time and hassle.

Partner With Us and Grow Your Revenue!

We’re here to help your accounting business thrive and grow! Contact your CorpNet account manager if you have any questions about our marketing and other resources.

Although the primary difference between a single-member LLC (SLLC) and a multi-member LLC may be obvious (the first has one owner and the second has two or more), these variations of the Limited Liability Company business structure have other nuances to consider. They share many characteristics, but there’s more than just the difference in the number of owners to ponder when deciding whether one or the other might be a good fit for your business.

Choosing between a single-member LLC vs. a multi-member LLC or other business entity type involves thinking about ownership, personal asset protection, management, income tax treatment, business formation, and compliance.

Because the entity type affects so many critical aspects of starting and running a business, it’s essential to research the pros and cons of each and ask for advice and direction from an attorney and an accountant or tax advisor.

Consideration for Deciding Between Single and Multi-Member

1. Ownership of the LLC

Every state in the United States allows for the formation of a Limited Liability Company business structure.

Most states allow the following entities to form an LLC:

• United States citizens
• Non-U.S. citizens
• Non-U.S. residents
• Another LLC or Corporation

Ownership options:

• Single-member LLC Ownership – A single-member LLC has one owner (member) who has full control over the company. The LLC is its own legal entity, independent of its owner.
• Multi-member LLC Ownership – A mMulti-member LLC has two or more owners (members) that share control of the company. The LLC is its own legal entity, separate from its owners. There may be an unlimited number of members in a multi-member LLC (unless it elects for S Corporation tax treatment, which allows for only 100 or fewer). The LLC may decide on how (what percentage of) profits and losses will be distributed among its members.

Depending on the situation, either option will have advantages and disadvantages. The number of owners in and of itself may not indicate the ideal choice. Sometimes, single business owners find it more beneficial to form a multiple-member LLC (for example, by making a spouse or other relative an additional member). And in some circumstances, multiple owners find it’s best to create one or more single-member LLCs.

2. Management of the LLC

A single-member LLC has one member, who is also considered the manager. Owners of a multi-member LLC, however, must decide if they would like the business to be member-managed or manager-managed.

The two management options include:

• Member-managed LLC – All of the LLC’s members participate in the work of the business. The company must have the majority approval of all of its members when entering contracts, securing loans, and making other significant decisions. States will consider an LLC to be member-managed unless its formation documents specify otherwise.
• Manager-managed LLC – Members agree on a manager, either a particular member or members of the LLC or a third-party, to whom they give authority to manage the day-to-day operations and decisions of the business. Any members that are not in a manager role typically make higher-level, strategic decisions, or they might act as passive owners with just a financial investment in the company.

Regardless of whether an LLC is single-member, multi-member, and member-managed, or multi-member and manager-managed, it’s essential to have an operating agreement in place. An operating agreement, although typically not required by a state, helps ensure all owners are on the same page about how the business should be operated and what are each individual’s roles, responsibilities, and decision-making authority. An LLC operating agreement also spells out what should happen in the event of members leaving (or dying), dissolving the company, or disagreements among members.

3. Personal Asset Protection

Both the single-member LLC and multi-member LLC protect owners’ personal assets. Because the LLC is a separate legal entity from its members, owners’ personal property is insulated from the liabilities related to the business conducted by the LLC. So, if someone sues the LLC or the business cannot pay its financial debts, LLC members generally don’t have to worry about losing their personal assets (such as a home, car, bank accounts, retirement savings, etc.) beyond the extent of their investment in the company.

Realize, owners might be held personally responsible in some situations. For example, owners’ finances and personal property might be at risk if:

• A member has committed fraud or other illegal business activities.
• A member has done anything (like co-signing or guaranteeing a business loan) to compromise the line of separation between the business and personal transactions.
• A member has not managed the LLC according to the operating agreement.

4. Income Tax Treatment

For federal income tax purposes, by default, a single-member LLC is treated the same as a sole proprietor, and a multi-member LLC is treated as a partnership. In either case, the LLC’s profits and losses pass through to its owners.

In a single-member LLC, an LLC’s owner reports the business’s profits and losses on Schedule C of IRS Form 1040, and the business does not report or pay taxes independently. The LLC owner must also pay self-employment taxes (Social Security and Medicare) on all taxable income from the business. Income taxes are usually paid via quarterly estimated tax payments. Other fees, such as franchise fees, that LLCs must pay, as well.

5. Ongoing Compliance

Both single-member and multi-member LLCs have business compliance tasks that they must complete to maintain their business entity and the personal liability protection that it provides. Generally, a single-member LLC will have less-complex requirements to fulfill than a multi-member LLC.

LLC compliance could include the following tasks and more: paying taxes and fees, submitting an annual report, holding annual meetings and keeping minutes (not a requirement but may strengthen personal liability protection in the event of a lawsuit), renewing licenses and permits, and maintaining company records at the office (e.g., articles of organization, operating agreement, names, and addresses of members and managers, tax returns, bank statements, and financial records). Not all states’ requirements are the same. Failure to comply with the rules or meet deadlines could bring on fines or other penalties, lawsuits, or even suspension of the business.

CorpNet’s free Compliance Portal offers an easy way to keep on top of all compliance to-dos.

How to Form a Single or Multi-Member LLC

1. Choose a business name – CorpNet’s free business name search tool can help verify if the desired name is available.
2. Apply for an EIN – All LLCs must have an EIN, whether or not they will have employees. The IRS issues these Federal Tax ID Numbers for free, and if desired, CorpNet can help businesses complete the form to obtain one.
3. Designate a registered agent – An LLC must appoint a registered agent to accept legal paperwork and important government notices on behalf of the LLC. The registered agent must meet several requirements, including having a physical address in the state where the business is registered. CorpNet offers registered agent services in all 50 states.
4. File Articles of Organization with the state – This document and a filing fee are required to legally register an LLC in the state that will be home to the business. Information requested and fee amounts vary by state. CorpNet’s filing experts will help ensure paperwork is completed and submitted accurately.
5. Complete Entity Classification Election Form – File IRS Form 8832 to determine the LLC’s tax status. If electing S Corporation tax treatment, IRS Form 2553 must be completed. CorpNet can handle this paperwork, as well.
6. Create an operating agreement – Although not required by states, the LLC operating agreement is a critical document that sets the rules for how the LLC will be run, who has what authority and responsibilities, how profits will be distributed, how disagreements among members will be settled, and more. Even single-member LLCs should consider having an operating agreement; it can help support the LLC’s limited personal liability status in the event of a lawsuit by demonstrating separation between the owner and the business.
7. Open a business bank account – Setting up a dedicated bank account for the LLC is a crucial step to ensure the business maintains “the corporate veil” that helps shield LLC members’ personal assets from the liabilities of the company.
8. Obtain the necessary business licenses and permits – Depending on the type of business an LLC conducts and where it’s located, different business licenses and permits may be needed to operate legally. CorpNet can help identify the requirements and complete the applications. It’s also helpful to consult the Secretary of State office, county, and municipality to verify the requirements.
9. Know and abide by hiring and employment laws – An LLC that has employees must follow employment-related rules and submit mandatory reports at the federal, state, and possibly local level.
10. Learn what is required to stay in good standing – On an ongoing basis, an LLC must stay up to date with all required business compliance formalities.

Converting From a Multi-member LLC to a Single-Member LLC

Can a multi-member LLC revert to a single-member LLC? The answer is yes! To convert a multi-member LLC to a single-member LLC, you’ll need to file Form 8832. Form 1065 will no longer be required, however, you will need to check the last year it was a multi-member LLC on the final box when submitted. Moving forward, the single-member LLC will then be reported on the individual’s personal tax return.

Which One is Right for Your Business?

If you’ve reached an informed decision after talking with an attorney, accountant, and other trusted advisors; reaching out to the state, county, and municipal offices; and weighing the pros and cons, CorpNet is here to help you save time and money as you start your business. Contact our filing experts today to handle filing your business registration forms and other mission-critical paperwork.