Start the year strong – ensure your business is legally compliant. California corporation law requires all corporations and limited liability companies to comply with certain requirements to remain legally complaint. Forgetting a deadline or missing a filing will prevent your company from legally operating. To ensure your business stays compliant, take steps now by creating a log of all compliance dates and actions that need to be taken. Your log should include:
- Annual Meetings and Minutes: Your By-Laws and California law requires all corporations to hold an annual Shareholders and Board of Directors Meeting. These meetings should include a discussion on the condition of the company and a ratification of actions taken. Shareholders are required to annually appoint the Board of Directors and the Board of Directors elect the officers for the next year. Ensure that the minutes from these meetings are in writing and added to your corporate records.
- Update By-Laws or Operating Agreement. Each business should review its By-Laws or Operating Agreement. Laws sometimes change and business operations evolve with the growth of the business. Your By-Laws or Operating Agreement should remain compliant with current law and your business operations.
- Secretary of State Filings: California requires periodic informational filings. All corporations are required to file an annual Statement of Information. Limited Liability Companies must file a Statement of Information every two years.
- Tax Returns and Payments: Every business must file its State and Federal Tax Returns annually; regardless of whether it earned any taxable income. California also requires all businesses to pay an annual Minimum Franchise Tax.
- Other Requirements: Depending on your business, you may have other industry specific compliance requirements. Review these special requirements and log compliance dates.
What happens if you miss a compliance deadline? Your company may be subject to fines, a halt of operations and, worse, you could be become personal liable for your company’s obligations. If you are unsure how to keep your company compliant, contact Kristina Reed.