Waiting until the mayhem of the holidays arrives to tackle mandatory business compliance tasks makes an already stressful season even more trying, writes Nellie Akalp, CEO and founder of CorpNet.com. And delaying filings, or failing to submit reports and forms on time can result in fines, penalties, and even suspension or dissolution of a business.

Fortunately, with some forethought and planning, business owners can get a jump on completing business compliance tasks before becoming neck-deep in buying (and wrapping!) gifts, traveling to relatives, and hosting holiday parties.

The following are several year-end requirements many business owners must tackle to make sure their business compliance tasks are done and that their companies are in good standing.

Entrepreneurs should make sure they understand the specific rules and requirements applicable to them. Consulting with a trusted attorney and tax advisor can help make sure nothing gets overlooked.

1. Hold an annual meeting.

Nearly every state requires corporations to hold annual shareholder meetings and record minutes from those meetings. Some states also require annual meetings for LLCs (limited liability companies.

2. Submit an annual report.

Many states require LLCs and corporations to submit an annual report every year. Some have biennial reports (every two years)  instead.

Others, like Pennsylvania, follow a different schedule.  Due dates for those reports also vary.

Business owners must research their state’s rules and deadlines so that they don’t miss this critical compliance responsibility.

3. Review tax payments made in 2021 so far.

Businesses (such as sole proprietorships, general partnerships, and disregarded entity LLCs) that make quarterly estimated income and self-employment tax payments throughout the year can benefit from reviewing their year-to-date revenue, expenses, and tax payments.

Checking the math can help them determine if they’ve underpaid or overpaid their taxes for the year. Then, they can discuss their situation with their tax advisor or accountant to see if it might make sense to make any adjustments to their last estimated tax payment of the year to offset any overage or shortage.

4. Evaluate if the business entity type still creates the best legal and financial scenario.

The business structure a startup chooses initially might not remain the best option as the company grows and evolves.

For example, a sole proprietorship that has added employees to its payroll and expanded its product lines may find that the personal liability protection and tax flexibility of an LLC will provide an optimal situation legally and financially.

 Attorneys, accountants, and tax advisors can help entrepreneurs assess the entity type that will serve their needs and determine the ideal time to make the change effective.

5. Inform the state of fundamental changes.

Businesses registered as limited liability companies and corporations must officially notify the state of certain changes that have occurred with the entity.

In many states, the form used for the filing is called either “Articles of Amendment” or “Certificate of Amendment.”

Generally, changes that warrant an amendment notification include:

  • The company has changed its name.
  • The business moved and now has a new address.
  • One or more of the LLC’s members have left the organization, or there are new members.
  • The corporation has authorized more shares to be sold.
  • The corporation added a new class of stock.
  • There have been changes to who is serving on the corporation’s board of directors.
  • The entity has changed its registered agent.
  • The business added, changed, or deleted provisions of its original organizational documents – e.g., Articles of Organization (LLC) or Articles of Incorporation (corporation).

Business owners should submit articles of amendment to report changes like these as soon as possible in the year they occurred so that the state has accurate information on record about their company.

6. Register for Payroll Taxes.

Entrepreneurs who plan to hire their first employees in 2022 can register for payroll taxes before the new year arrives.

 Employers withhold federal income tax from employees’ paychecks, so they need an EIN (Employer Identification Number) if they haven’t already obtained one from the IRS.

State registrations include State Unemployment Insurance Tax (SUI.  

Also, most states require businesses to register to withhold State Income Tax (SIT) from their employees’ gross wages and remit them to the state’s tax agency.

7. Dissolve an inactive business.

Closing a business involves more than simply putting the brakes on selling products or services. Entrepreneurs must follow a process to officially end the LLC or corporation’s existence by filing a document called “Articles of Dissolution” or “Certificate of Termination” with the Secretary of State's office.

In some states, general partnerships must file paperwork to notify their state of their dissolution.

Other tasks might include closing the business’s tax accounts and canceling business licenses and permits.

Failing to formally notify the appropriate state, federal, and local agencies when closing a business could mean that the owners will remain responsible for filing required reports and paying taxes and other fees even though they have ceased operations.

Find many other resources for the small business owner at SCORE Chester and Delaware County.