End of Year Legal Checklist for Businesses
As many people scramble to finish their last-minute holiday shopping and make sure everyone on their gift list is covered, business owners have another list to pay attention to. This list is called the business compliance checklist. Businesses must fulfill their legal obligations to stay in good standing with the state. Failure to do so may result in fines, fees, penalties, and even suspension or dissolution of their companies.
An end of year legal checklist typically includes reviewing and filing annual reports, checking and renewing business licenses, assessing any business changes throughout the year, verifying tax compliance, reviewing corporate governance policies, considering dissolutions or withdrawals for inactive entities, and filing final payroll taxes.
HERE IS YOUR END OF YEAR LEGAL CHECKLIST:
Report Changes to State
If a business is a registered limited liability company or a corporation, it must report certain changes to the state. Some of the possible modifications the state will want to know about include business name change, business address change, business registered agent change, or if your corporation requires more shares or two classes of stock. To report significant changes like these listed, business owners must file articles of amendment with the state and pay the associated fee.
Report Beneficial Ownership Information
If you have a limited liability company or a corporation, your company may be one of the many 32 million companies affected by the Corporate Transparency Act. These companies are required to file a beneficial ownership information report with the Financial Crimes Enforcement Network (FinCEN). This report includes information about the company and the individuals who ultimately own or control the business. Companies formed prior to January 1, 2024, must provide information about the company and its beneficial owners before December 31, 2024. Companies that are formed in 2024 and beyond must provide information about the company, the beneficial owners, and the company applicant within 90 days of formation.
Hold Annual Meeting
Nearly every state requires corporations to hold annual meetings with their shareholders and directors and record minutes from those meetings. At the annual meeting of shareholders, the shareholders appoint the directors. At the annual meeting of the directors, the directors appoint the officers. These annual meeting minutes must be included in the corporate records and held every year. These minutes become part of the corporate compliance required by states.
Prepare Annual Reports
If your company bylaws require that you prepare an annual financial report for shareholders, you should begin preparing the report unless all shareholders waive that requirement. You may also want to change certain terms in the bylaws, as this would be the best time to make any changes.
Change Business Entity Type
A startup’s business structure might serve it well initially. However, as a company grows and evolves, its owners might find that a different entity type will prove more advantageous. Now is a good time for business owners to consider making a change because registering a new business structure with an effective date of January 1 can provide a clean break between operating as one business structure this year and the new one in the new year. That can help keep things simple for tax filing purposes.
Review Contracts
The end of the year is an ideal time to review the Company’s outstanding contracts for automatic renewals, renegotiating for better terms, confirming compliance, and addressing potential breaches.
Review Company Employee Documents
If you have employees, you should review your employee handbook, employment agreements, and ensure accurate job descriptions and performance criteria are up to date and in accordance with the company culture.
While the end of each calendar year is a busy time for everyone, especially business owners, taking some time to review your legal checklist will save you both time and money. We are always available to answer questions and assist you in conducting your annual legal review of your business.
If you have questions on how to protect your small business, schedule your consultation with the Queen of Business Law® Kelly Bagla, Esq. today and secure your peace of mind.
For more information on how to legally start, grow, and exit your business please visit my website at www.BaglaLaw.com.
Disclaimer: This information is made available by Bagla Law Firm, APC for educational purposes only as well as to give you general information and a general understanding of the law, and not to provide specific legal advice. This information should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.
