This post is brought to you by Deborah Sweeney, CEO of MyCorporation.com
Small business compliance isn’t a topic entrepreneurs immediately think of when starting up. Marketing, packaging, sales, investments – these are much more exciting! But compliance regulations? Not so much. However, if you don’t comply with state regulations, you might not have a business to worry about. The state could come in, serve you with some serious fines, or even dissolve your company. To keep this from happening, it’s important that you do everything you can to stay compliant. Thankfully, staying on the state’s good side isn’t hard if you know what needs to be filled out and paid. Keep a calendar
Planning ahead is the easiest way to keep your business in compliance. Plan in advance what forms you need to fill out, when certain meetings have to be held, and when you have to send in a check. If you run a sole-proprietorship, your biggest concern will be renewing your DBA name and keeping your licensing updated. In either case, all you typically have to do is fill out a form and pay a small fee to your local and state government. When you run an LLC or Corporation, compliance becomes more complicated. You have to file an annual report to update the state on any changes in the entity, and pay an annual fee. Corporations are also required to hold annual shareholder meetings. Research and write down any important dates. Annual filings are easy to forget, but if one skips your mind, you’ll probably have to pay a fine. Send in Estimated Tax Payments
As a new business owner, you definitely don’t want to test the IRS’s patience – your life will become very difficult if they think you’re trying to dodge your taxes. Anyone that is self-employed and expects to owe more than $1,000 in taxes for the year is required to make quarterly estimated payments. Corporations that expect to owe more than $500 in taxes also have to pay estimated tax. To make payment a bit easier, the IRS has forms to help businesses comply. Corporations should consult Form 1120-W, and everyone else should read Form 1040-ES. If your payments are a little off, that’s fine. Just don’t grossly underpay what you’re expected to owe. Since estimating tax payments can be tough, new businesses should meet with an accountant for a consultation to figure out to send in. Know the rules
Preparation and knowledge are two of a business owner’s greatest allies. Before you start your business, you need to know exactly what you are getting into. Running a sole-proprietorship may mean fewer concerns with compliance, but it leaves your personal assets open to seizure if the business fails to pay its debts. Protecting yourself by forming an LLC or corporation might help you feel safer, but you have to know, and play by, the rules that govern these entities. For example, you can’t run an LLC like a sole-proprietorship. Even if you’re running a single-member LLC, you should still have an operating agreement and a record proving you adhere to it. Corporations have strict, formalized procedures in place. Shareholder and director meetings must be held, minutes must be kept, and any financial activity needs to be documented. The formal procedure of running a corporation or, to a lesser extent, an LLC can feel alien and rigid to a small business. But if you want to stay compliant, you have to play by the rules.Keeping your business compliant with state and local law is not that hard if you know what is expected of you. You can find information on deadlines, forms, and fees on most state websites – it’s just up to you to remember to comply. Bringing your business back into good standing with the state, on the other hand, is much more time consuming and expensive. Compliance has to be one of your many responsibilities, but just put in a little effort throughout the year, and you shouldn’t have much to worry about.
About the Author:
Deborah Sweeney is the CEO of MyCorporation.com. MyCorporation is a leader in online legal filing services for entrepreneurs and businesses, providing start-up bundles that include corporation and LLC formation, registered agent, DBA, and trademark & copyright filing services. MyCorporation does all the work, making the business formation and maintenance quick and painless, so business owners can focus on what they do best. Follow her on Google+ and on Twitter @mycorporation. "
Please note that KPMG Spark’s sponsorship of this blog article is not intended to address the specific circumstances of any particular individual or entity and does not constitute an endorsement of any entity or its products or services. This content represents the views of the author, and does not necessarily represent the views or professional advice of KPMG Spark.