Did you know many businesses will have a new federal reporting requirement in 2024? Most registered business entities — like Limited Liability Companies (LLCs) and Corporations — must file a beneficial ownership information (BOI) report with the Financial Crimes Enforcement Network (FinCEN).

In September 2022, FinCEN, a bureau of the U.S. Department of Treasury, announced its final rule requiring certain entities to report their beneficial ownership information. The BOI report is designed to provide transparency about who owns and benefits from an LLC or Corporation. It requests identifying information about the entity’s beneficial owners (the individuals who directly own or control a company).

The purpose of the reporting requirement is to make it more difficult for unscrupulous individuals to get away with illegal or improper gains through shell companies or other questionable ownership arrangements. It will provide the U.S. government with information that can potentially help it enhance national security and protect financial systems from criminals who traffic drugs, commit fraud, launder money, and engage in other illicit activities.

There is no cost to submit a BOI report to FinCEN.

Who Must File a BOI Report?

A company must submit a BOI report if it meets the FinCEN’s beneficial owner reporting rule’s definition of a “reporting company” and does not qualify for an exemption.

How do you determine if your business qualifies as a reporting company? Reporting companies are classified as either domestic or foreign.

The criteria for domestic or foreign companies include:

• Domestic reporting company – A corporation, LLC, or any business entity created through filing a registration document with a secretary of state (or similar) office under the law of a state or Indian tribe.
• Foreign reporting company – A corporation, LLC, or other entity formed under the law of a foreign country that filed a document with a secretary of state or any similar office to register to do business in any U.S. state or tribal jurisdiction.

LLCs and C Corporations (including those with S Corporation status) fall under these definitions. Likewise, other entity types formed by filing registration documents with the state may be considered reporting companies — e.g., Limited Partnerships, Limited Liability Partnerships, Limited Liability Limited Partnerships, and business trusts.

FinCEN’s website provides a chart in its Small Entity Compliance Guide to help you assess if your company must report beneficial ownership information.

Who Is Exempt from BOI Reporting?

Sole Proprietorships and General Partnerships are not required to report business ownership information because they are not registered legal entities.

Also, FinCEN’s reporting rule has named 23 types of companies that may qualify for exemption from filing a BOI report. If an LLC or Corporation in one of the categories meets the exemption criteria for that category, it does not have to file a BOI report.

Entities that meet the criteria for any of the 23 exemption types are excused from the beneficial ownership reporting rule:

1. Securities reporting issuer – An entity is exempt if it is either an issuer of a class of securities registered under section 12 of the Securities Exchange Act of 1934 or it is an entity required to file supplementary and periodic information under section 15(d) of the Securities Exchange Act of 1934.
2. Governmental authority – For exemption, the entity must be established under the laws of the United States, an Indian tribe, a State, or a political subdivision of a State, or under an interstate compact between two or more States and it must exercise governmental authority on behalf of the United States or any such Indian tribe, State, or political subdivision.
3. Bank – An entity is exempt if it is a “bank” as defined in section 3 of the Federal Deposit Insurance Act or section 2(a) or 202(a) of the Investment Company Act of 1940.
4. Credit union – To be exempt, an entity must be a “Federal credit union” as defined in section 101 of the Federal Credit Union Act or a “State credit union,” as defined in section 101 of the Federal Credit Union Act.
5. Depository institution holding company – An entity is exempt if it is a “bank holding company” as defined in section 2 of the Bank Holding Company Act of 1956 or it is a “savings and loan holding company” as defined in section 10(a) of the Home Owners’ Loan Act.
6. Money services business – For exemption, an entity must be a money transmitting business or a money services business registered with FinCEN.
7. Broker or dealer in securities – An entity is exempt if it is “broker” or “dealer,” as defined in section 3 of the Securities Exchange Act of 1934 and it is registered under section 15 of the Securities Exchange Act of 1934.
8. Securities exchange or clearing agency – An entity is exempt if it is an “exchange” or “clearing agency,” as defined in section 3 of the Securities Exchange Act of 1934 and the entity is registered under sections 6 or 17A of the Securities Exchange Act of 1934.
9. Other Exchange Act registered entity – To be exempt, an entity, it must be registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934 and not be a securities reporting issuer (Exemption #1), broker or dealer in securities (Exemption #7), or securities exchange or clearing agency (Exemption #8).
10. Investment company or investment adviser – An entity is exempt if it is an “investment company” (as defined in section 3 of the Investment Company Act of 1940) or “investment adviser” (as defined in section 202 of the Investment Advisers Act of 1940) and the entity is registered with the Securities and Exchange Commission under either the Investment Company Act of 1940 or the Investment Advisers Act of 1940.
11. Venture capital fund adviser – The entity must be an investment adviser that is described in section 203(l) of the Investment Advisers Act of 1940 and have filed Item 10, Schedule A, and Schedule B of Part 1A of Form ADV with the Securities and Exchange Commission.
12. Insurance company – The entity is exempt if it is an “insurance company” as defined in section 2 of the Investment Company Act of 1940.
13. State-licensed insurance producer – For exemption, the entity must be an insurance producer authorized by a State and subject to supervision by the insurance commissioner or a similar official or agency of a State and it must have an operating presence at a physical office within the United States where it regularly conducts its business (must be a physical location that the entity owns or leases and that is physically distinct from the place of business of any other unaffiliated entity).
14. Commodity Exchange Act registered entity – The entity is exempt if it is a “registered entity” as defined in section 1a of the Commodity Exchange Act or it is registered with the Commodity Futures Trading Commission under the Commodity Exchange Act as any of the following: futures commission merchant, introducing broker, swap dealer, major swap participant, commodity pool operator, commodity trading advisor, retail foreign exchange dealer.
15. Accounting firm – An entity that is a public accounting firm registered in accordance with section 102 of the Sarbanes-Oxley Act of 2002 is exempt from BOI reporting.
16. Public utility – The entity is exempt if it is a regulated public utility and it provides telecommunications services, electrical power, natural gas, or water and sewer services within the United States.
17. Financial market utility – For exemption, an entity must be a financial market utility designated by the Financial Stability Oversight Council under section 804 of the Payment, Clearing, and Settlement Supervision Act of 2010.
18. Pooled investment vehicle – BOI reporting exemption is granted if an entity is an investment company, as defined in section 3(a) of the Investment Company Act of 1940 or a company that would be an investment company under that section but for the exclusion provided from that definition by paragraph (1) or (7) of section 3(c) of that Act and it is operated or advised by any of these types of exempt entities: bank, credit union, broker or dealer in securities, investment company or investment adviser, venture capital fund adviser.
19. Tax-exempt entity – The entity must meet any one of the following criteria to be exempt:
    • It is an organization that is described in section 501(c) of the Internal Revenue Code of 1986 (determined without regard to section 508(a) and exempt from tax under section 501(a).
    • It is an organization described in section 501(c) of the Code and was exempt from tax under section 501(a) but lost its tax-exempt status less than 180 days ago.
    • It is a political organization, as defined in section 527(e)(1) of the Code, that is exempt from tax under section 527(a).
    • It is a trust, as described in paragraph 1 or 2 of Internal Revenue Code section 4947.
20. Entity assisting a tax-exempt entity – The entity must meet all four of the following criteria:
    • The entity operates exclusively to provide financial assistance to or hold governance rights over any tax-exempt entity described by Exemption #19.
    • The entity is a United States person as defined in section 7701(a)(30) of the Internal Revenue Code of 1986.
    • The entity is beneficially owned or controlled exclusively by one or more United States persons who are United States citizens or lawfully admitted for permanent residence. “Lawfully admitted for permanent residence” is defined in section 101(a) of the Immigration and Nationality Act.
    • The entity derives at least a majority of its funding or revenue from one or more United States persons who are United States citizens or lawfully admitted for permanent residence.
21. Large operating company – An entity qualifies for exemption if all six of the following criteria are true:
    • It employs more than 20 full-time employees. (Generally, “full-time employee” means an employee employed by the entity for an average of 30 or more hours of service per week.)
    • More than 20 of the entity’s full-time employees are employed in the United States.
    • The entity has an operating presence at a physical office within the United States.
    • The entity filed a Federal income tax or information return in the United States for the previous year demonstrating more than $5,000,000 in gross receipts or sales.
    • The company reported >$5,000,000 in gross receipts or sales (net of returns and allowances) on the entity’s IRS Form 1120, consolidated Form 1120, Form 1120-S, Form 1065, or other IRS form.
    • The gross receipts or sales amount remains greater than $5,000,000 after excluding gross receipts or sales from sources outside the United States.
22. Subsidiary of certain exempt entities – An entity qualifies for exemption if the entity’s ownership interests are wholly owned or controlled (directly or indirectly) by any of the above exempt entities — with the exceptions of money services business (Exemption 6), pooled investment vehicle (Exemption 18), and entity assisting a tax-exempt entity (Exemption 20).
23. Inactive entity – An entity qualifies for exemption if all six of the following criteria apply:
    • The entity was in existence on or before January 1, 2020.
    • The entity is not engaged in active business.
    • The entity is not owned by a foreign person, whether directly or indirectly, wholly or partially.
    • The entity has not experienced any change in ownership in the preceding twelve-month period.
    • The entity has not sent or received any funds of more than $1,000 in the prior 12-month period.
    • The entity does not otherwise hold any kind or type of assets, in the United States or abroad, including any ownership interest in any corporation, limited liability company, or other entity.

Why are those categories exempt? Typically, those companies are subject to other reporting requirements that provide the government with information sufficient for identifying the individuals who own or control them.

When Will FinCEN Accept BOI Reports?

FinCEN will begin accepting the reports on January 1, 2024. No early submissions are allowed.

BOI reporting due dates:

• Existing Companies – Reporting companies created or registered to do business before January 1, 2024, must file their initial BOI report by January 1, 2025.
• New Companies – Any reporting company created or registered on or after January 1, 2024, must file its initial BOI report within 90 days of its formation. The 90-day window begins either when the company receives notice from the state that its creation or registration is effective, or after a secretary of state (or similar office) provides public notice of the reporting company’s creation or registration, whichever is earlier.

Reporting companies must submit updated or corrected BOI reports as needed. There is no annual or other recurring reporting requirement. However, if information about a reporting company or its beneficial owners in a filed report has changed or is inaccurate, the business must submit an updated report within 90 calendar days after the date of the change or within 90 days after it became aware of the inaccuracy. No updated report is required if a company’s applicant information has changed.

BOI Reporting Requirements

The BOI report collects the following information about the reporting company and its beneficial owners and company applicants.

Reporting company information:

• Entity’s full legal name
• Any DBAs or trade names
• Principal U.S. business address
• Formation jurisdiction (state, tribal, or foreign)
• IRS taxpayer ID number (TIN, Social Security Number, EIN)

Beneficial owners and company applicants information:

• Full legal name
• Date of birth
• Complete residential street address (depending on the circumstances, company applicants should use the business address instead).
• Personal identification number and issuing jurisdiction from — and image of — a non-expired U.S. passport; state driver’s license; other ID document issued by a state, local government, or tribe; or a foreign passport if the individual doesn’t have any of the other forms of identification.

If a beneficial owner or company applicant has obtained a FinCEN identifier, the reporting company can include that FinCEN identifier in its report instead of the other information about the entity or individual. A FinCEN identifier is a unique ID number issued to an individual or reporting company upon request. Individuals may request one through an electronic application. A reporting company can request one by checking a box on its BOI report. No one is required to get a FinCEN identifier.

Who Is a Beneficial Owner of a Reporting Company?

Any individual who directly or indirectly exercises substantial control over the reporting company OR owns or controls at least 25% of its ownership interests is a beneficial owner. It’s possible a beneficial owner could have both substantial control and 25% or more ownership interests.

A reporting company can have multiple beneficial owners and must report all of them in its BOI report.

Note that FinCEN has some special reporting rules applicable to certain types of beneficial owners (e.g., minor children, individuals whose ownership interests in a reporting company are held through one or more entities considered exempt from the reporting company definition, and companies that meet the pooled investment vehicle exemption criteria).

What Does Substantial Control Mean?

Four general criteria determine if an individual has substantial control over a reporting company.

If an individual meets at least one of these criteria, they are a beneficial owner:

1. The individual has a senior position of authority — e.g., President, Chief Financial Officer, Chief Executive Officer, Chief Operating Officer, General Counsel, or other title and similar responsibilities.
2. The individual has the authority to appoint or remove any senior officer or a majority of the board of directors (or other governing body).
3. The individual makes or influences important business and financial decisions by the reporting company.
4. The individual has some other form of substantial control over the reporting company. (This is a catch-all criterion for any unique ways flexible company structures might allow individuals control over the business.)

Substantial control might be direct or indirect.

Examples of direct substantial control include:

• Serving on the reporting company’s board of directors
• Owning or controlling a majority of voting power or voting rights
• Having rights associated with financing or interest

Examples of indirect substantial control include:

• Controlling any intermediary entities that exercise substantial control over a reporting company
• Having financial or business relationships with other entities or individuals acting as nominees

What Is Considered Ownership Interest for BOI?

Any individual who owns or controls 25% or more of the ownership interests of a reporting company is a beneficial owner.

An ownership interest can be one or more of the following:

• Equity
• Stock
• Voting rights
• Capital or profit interest
• Any instrument convertible into equity, stock, voting rights, or capital or profit interest
• Options or other non-binding privileges to buy or sell any of the interests mentioned above
• Any other instrument, contract, or mechanism to establish ownership

Who Is Excluded from the Beneficial Ownership Rule?

If an individual considered a beneficial owner matches the description of one of FinCEN’s five exceptions, the reporting company does not have to include beneficial owner information about them in their BOI report.

The five exceptions to the definition of beneficial owner include:

1. The individual is a minor child (provide information about the child’s parent or legal guardian instead).
2. The individual acts on behalf of a beneficial owner as a nominee, intermediary, custodian, or agent.
3. The individual is an employee whose control and economic benefits from the company are derived exclusively from their status as an employee and the person is not a senior officer of the reporting company.
4. The individual’s only interest in the reporting company is a future interest through inheritance. (After the individual inherits their interest, they must be reported as a beneficial owner.)
5. The individual is a creditor of the reporting company.

What Are Company Applicants and Do You Have to Report Them?

Company applicants fall into two categories:

• Direct filer – A direct filer is an individual who physically or electronically files a reporting company’s registration documents to create the business entity.
• Directs or controls the filing action – An individual primarily responsible for directing and controlling the entity formation filing, even though they did not personally file the document with the state.

Company applicants must be individuals, not companies or legal entities. All reporting companies required to provide company applicant information must identify a direct filer. The second category of company applicants only applies if more than one person was involved in filing the reporting company’s formation documents. A reporting company will report a maximum of two company applicants (i.e., one from Category 1 and one from Category 2).

Not all reporting companies must report their company applicant information:

• Required to Report Company Applicants – Domestic reporting companies created on or after January 1, 2024 and foreign reporting companies first registered to do business in the U.S. on or after January 1, 2024
• Not Required to Report Company Applicants – Domestic reporting companies created before January 1, 2024 and foreign reporting companies first registered to do business in the U.S. before January 1, 2024

FinCEN’s Use of BOI Report Data

FinCEN will keep all the information it collects in a secure database. The information will not be publicly available. Federal, state, local, tribal, and foreign government officials may request to obtain beneficial ownership information for authorized activities related to national security, intelligence, and law enforcement. If the reporting company consents, financial institutions may have access to beneficial ownership information under certain circumstances.

Penalties for Not Reporting by the Deadline

A company could face civil penalties of up to $500 per day for each day beyond the report due date if it fails to provide complete and accurate BOI information. The willful failure or attempt to provide false or fraudulent beneficial ownership information could even result in criminal penalties, including imprisonment for up to two years and/or a fine of up to $10,000.

How to File Your Report

BOI reports will be filed electronically through FinCEN’s secure filing system. That system will be available starting January 1, 2024, and instructions for completing the BOI report form will be available on FinCEN’s website.

FinCEN is trying to make the beneficial ownership reporting as straightforward as possible. However, this is uncharted territory for business owners. If you need help determining whether your company is subject to the beneficial owner reporting requirements and who should be reported as beneficial owners, consider talking with your attorney, accountant, or FinCEN directly for guidance.

To save you time and give you peace of mind that your BOI report is completed accurately and on time, CorpNet is here to help prepare and file beneficial ownership reports for LLCs, Corporations, and other business entities. Contact us for assistance with this critical new compliance filing!

If you change the principal business address or mailing address of your Limited Liability Company (LLC), it’s critical to update your information with the IRS, state, and local tax and licensing authorities. If you don’t, important tax and legal documents might go to the wrong place — and you could even risk your LLC status by failing to inform government agencies of your new address.

Fortunately, changing your LLC’s address in the federal, state, and local records isn’t rocket science; however, it does demand some of your time and attention.

1. Update Your LLC Address With the IRS

LLC owners must file IRS Form 8822-B (Change of Address or Responsible Party — Business) to change their company’s physical and mailing addresses with the IRS. The form must be mailed to the appropriate IRS address (per the form’s instructions).

Keep a copy of your completed and signed Form 8822-B in your LLC’s records file at your principal office location.

2. Change Your LLC Address With Your State

The requirements to update an address depend on where the LLC has moved. Remember to keep copies of all forms and correspondence in your LLC records book.

New Address in the Same State

If an LLC has moved its principal location but remains in the same state, it must update its existing records in that state. Most states require business owners to submit Articles of Amendment or a similar form — and pay a fee — to change an LLC address with the Secretary of State (or comparable office) where the LLC’s formation documents were filed.

For example, in California, CorpNet’s home state, an LLC must submit a change of principal address by filing an updated Statement of Information (Form LLC-12) with the Secretary of State. There is no fee for filing a Statement of Information for making a change to an LLC’s formation documents between the required bi-annual Statement of Information filings.

An LLC must also notify the state’s tax agency. In California, that involves filing form FTB 3533-B (Change of Address for Businesses, Exempt Organizations, Estates and Trusts) with the Franchise Tax Board.

In addition, an LLC with an unemployment compensation account through the state’s labor department must also notify that agency of the address change. The required forms and the process vary by state. You may be able to find the information on the state’s website or request instructions by calling or emailing the agency.

Moving an LLC to a New State

Some states allow LLCs to transfer their existence from another state by domesticating to the new state, while others require they go through the entire formation process of filing Articles of Organization. Either way, the LLC must designate a registered agent in the new state and obtain any required tax IDs, licenses, and permits to legally operate there.

If the LLC will no longer operate in its old state, it must file Articles of Dissolution to end the entity’s existence there and take care of other tasks required to wind down the business. If the LLC will operate in both states with its principal office in the new state, its owners should research what must be done to change the LLC’s status in the old state from a domestic LLC to a foreign LLC.

4. Change Your LLC Address With Your Local Tax Authority and Licensing Agencies

The form an LLC must use and the process it must follow will depend on the county or municipality’s requirements. Many local tax agencies have that information on their websites, or you can contact them to learn what’s involved. As I mentioned earlier, make copies of all forms and documents for your LLC’s records.

If an LLC has licenses or permits, it must inform the issuing agencies of its change of address. Even if your LLC didn’t need licenses at its old location, it might need them at its new location because licensing requirements vary from one jurisdiction to another. Also, remember to cancel licenses you no longer need if you’ve moved out of a licensing agency’s jurisdiction.

As I mentioned earlier, make copies of all forms and documentation for your LLC’s records.

5. Other Parties to Notify of Your LLC Address Change

The above considerations are the tip of the iceberg! Virtually every party your LLC conducts business with should know about your company’s new location or mailing address.

• Bank and other financial institutions
• Credit card company
• Insurance companies
• Suppliers and vendors
• Customers

In addition to notifying all of the above, update your LLC’s sales documents and marketing collateral, too.

• Website
• Social media accounts
• Local profiles like Google Business Profile, Bing Local, or Apple Maps
• Brochures and flyers
• Email signatures
• Sales letters
• Contracts

Before you let the hustle and bustle of the holiday season take over your business (and your life), now’s a good time to review your financial situation and explore some money-saving small business tax tips. Below is a list of my top tax tips entrepreneurs can still benefit from at year-end.

1. Deduct Startup Expenses

Did you start your business this year? You may be able to claim some of your startup expenses on your tax return in the year you actually opened the business.

To qualify as a startup expense (a capital cost), the IRS requires the expense to meet two requirements:

• The expense was paid or incurred before the day your active trade or business began.
• The expense would be deductible for your business if you were already operating the business. Note: the actual business you open has to be in the same field as the business you had in mind when you made the purchase.

Other deductible costs associated with opening a business may include:

• Advertisement and marketing for the opening of the business
• Salaries and wages for employees who are being trained and their instructors
• Travel and other necessary costs for securing distributors, suppliers, or customers

2. Automate Accounting

Eliminate tax headaches by automating as much of your accounting as you can. Use a cloud-based accounting software application that syncs with your bank account and automatically categorizes and reconciles your credit card and bank transactions.

Then use an app to track expenses by taking pictures of receipts on your smartphone and uploading them to the cloud. Overstating or understating expenses is the best way to wave a red flag at the IRS, so know what you can and can’t deduct for travel and entertainment, and make sure you keep accurate records.

3. Defer Income and Purchase New Equipment

Are there some purchases you could make before the year ends? Increasing expenses, such as purchasing new equipment, is a great way to lower your tax bill. Buy that new copier or computer now! Check with your accountant as to whether you should take the whole write-off now or depreciate it over time.

If you expect your business to be in the same tax bracket or lower next year, defer revenues until next year by waiting until the end of December to invoice your customers. That way, you won’t pay taxes on that income until you file your returns the following year.

If you expect your business will be in a higher tax bracket next year than it is this year, accelerate revenues so they’ll be taxed at this year’s lower rate, and postpone deductible expenses until next year so you can enjoy the deduction when your tax rate is higher.

4. Contribute to a Retirement Plan

Making a pre-tax contribution to your retirement plan up to the maximum amount allowable will reduce your taxable income for this year. You have until December 31 to make your 401(k) contributions and until April of next year to make IRA contributions.

If you’re self-employed and haven’t set up a plan yet, you have until December 31 to set up and fund a one-participant 401(k) plan, also known as a solo 401(k).

5. Remember Your Rent Income

Do you own the building your business is located in? If you own the building, you might need to pay yourself the market rate rent and then pay taxes on the income. Check with your tax accountant to see if registering an LLC or corporation makes a difference to your tax requirements.

6. Give Back to the Community

One small business tax tip is to increase your deductions by making a contribution to charity before the end of the year. Choosing a local charity, cause, or school can boost your profile in the local community in addition to providing a tax break. Keep records of the tax ID for each nonprofit you donate to, so you don’t have to hunt for them at tax time.

7. File W-2s and 1099s

Do you have employees? January 31 of each year is your deadline to mail employees their W-2 forms and independent contractors their 1099s. (Since that date falls on a Sunday this year, the deadline will be the next business day.) New forms must be ordered each year; be prepared by ordering them early from your payroll service.

W-2 forms are also filed with the Social Security Administration (SSA) and show all the wages and taxes your company paid during the tax year. You total your W-2s and file the totals with a W-3 form. Verify all your employees’ names and Social Security numbers before you prepare the W-2s. You can verify up to 10 names and numbers on the Social Security Business Services Online website.

8. Plan for Estimated Taxes

Most small business owners know whether or not they’ll end up owing taxes. You can either set aside a certain amount of money every month to make sure you have enough to pay your bill at tax time, or you can start paying estimated taxes.

The general rule is:

• If you are filing as a sole proprietor, partnership, S corporation shareholder, or self-employed individual, and you expect to owe more than $1,000 in taxes, you should pay estimated taxes.
• If you are filing as a corporation and you expect to owe more than $500 in taxes, then, you should pay estimated taxes.
• If you had a tax liability last year, you may have to pay estimated taxes this year.

9. Remember Often Overlooked Deduction

Remember, you can deduct your tax preparation fees from your business taxes. Ask your tax preparer to invoice you this calendar year and pay all or half upfront. The same goes for any fees paid to a financial planner for your business.

10. Schedule a Tax Planning Session With Your Accountant

When it comes to taxes, your accountant can be your best friend. And, the cost of a special tax consultation will be paid back tenfold in tax savings.

Schedule an income tax planning session with your accountant, and before you meet, send your accountant copies of your current profit and loss statement, an expense report, an accounts receivables report, planned income for the rest of the year, and any other changes for the calendar year that should be discussed. This will allow your account to review this year, compare it to last year, and create an estimated tax amount that you can plan for or work to reduce in the remaining days of the year.

Maintaining a C Corporation or Limited Liability Company (LLC) is an ongoing process that requires constant attention. Unfortunately, most small business owners don’t know what they don’t know and busy entrepreneurs often find it tough to carve out time to research what’s required, let alone follow through on it.

Not maintaining compliance with all the rules and regulations might saddle you with fines and even expose your business to liability risks.

I don’t want that to happen to you and I’m sure you don’t either! Here’s a quick checklist of questions to ask yourself to assess your compliance readiness.

1. Have I obtained the required business licenses and permits for my business?

You may need local and/or state business licenses or permits to legally operate your business. Some need to be renewed regularly. A business license could be for anything from your profession (like a dentist) to a liquor or daycare license. If you don’t renew licenses on time, you could have your operations shut down until the issue is resolved.

2. Have I filed my initial or annual report and statement of information for my company?

C Corporations and LLCs must file annual reports in most states. Failure to submit a required annual report could result in the closure of your business. If you don’t know what your annual report requirements and deadlines are, you can review our state-by-state annual report guide.

3. Is my C Corporation or LLC going to be conducting business under a different name?

If you’ve incorporated your business, you’ve already registered your business name and don’t need a DBA (aka doing business as or fictitious name). But you will need one if you want to conduct business under a name that’s different than the name approved for your LLC or C Corporation. An example of this is you registered your business under Joe’s Happy Circus and you’d like to also operate it under The Birthday Palace. Those are two different names and the second name could require you to register a DBA.

4. Will my company be conducting business in a different state?

If your C Corporation or LLC will operate in a different state or in multiple states, you need to qualify to do business in each state in which you’ll be operating. That will require going through a foreign qualification registration process, much like when you formed your corporation or LLC. This foreign qualification process provides state authority to operate in this secondary location.

5. Will I be using the business name nationwide?

If so, you may want to seriously consider applying for a trademark or service mark to protect it from being used by a competitor. By registering your business in your local state, you protect the name of the business in that state only. You need a trademark to protect your name at a national level. While this might not matter for locally focused companies, it does matter for businesses that want to have offices and operations across multiple states.

6. Do I need to make any changes to my company information?

You need to officially notify the state if you make any key changes (such as your business address, company name, board members, etc.) to your C Corporation or LLC. The proper documentation for this is called the Articles of Amendment. This must be done to keep the state up to date on the current operations of the business.

7. Have I registered my company for tax and compliance alerts throughout the year?

In a way, this last question is the answer to the other six that came before it. Using CorpNet’s Compliance Portal is a wonderful way to get the peace of mind that your business is on top of all it needs to do to be compliant. It will keep you in the know about all your critical filings and due dates. It doesn’t get much easier than that!

As an entrepreneur, I understand the challenges of keeping up with compliance requirements. It’s daunting for time-crunched small business owners who are responsible for all aspects of starting and running their businesses. However, compliance is extremely important to avoid penalties, which could be financially and legally debilitating. It pays to make it a priority.

Want to make compliance as uncomplicated and convenient as possible? Consider using CorpNet to handle processing all your registrations and filings. We’re available to create and submit documentation for you in all 50 United States.

As the end of the year approaches, there are many things on a business owner’s plate that must be addressed. And while it may sound mundane, meeting minutes are one of them. Making sure proper minutes have been taken at meetings is critical for proving accountability, transparency, and legal compliance.

Whether you’re an accountant making sure your clients are compliant or a business owner looking after your own concerns, it’s important to know about meeting minutes, which companies need them, how often they’re needed, and the details of what needs to be included.

Why Meeting Minutes Matter

Meeting minutes record the numerous discussions, decisions, and actions taken during formal corporate meetings, such as board or shareholder meetings. While taking minutes may appear to be mere administrative tasks, meeting minutes have crucial uses for businesses, including:

• Legal Compliance – Meeting minutes are instrumental in proving a company’s adherence to its legal and regulatory obligations. They provide evidence that meetings were conducted fairly and pivotal decisions were made with due diligence.
• Accountability – Minutes are key to holding meeting participants accountable for their actions and commitments. They are a reference point indicating who agreed to do what and by when—so the likelihood of disputes or misunderstandings is diminished.
• Historical Documentation – Essentially, meeting minutes become the historical record of the company’s decision-making process, offering invaluable reference points for future audits, legal proceedings, and business continuity.

Not every company has to maintain meeting minutes, but certain business entities should prioritize them. Generally, companies structured as corporations, LLCs, or nonprofits need to keep meeting minutes for the following reasons:

• Corporations – Both publicly traded and privately held corporations are legally obligated to keep meeting minutes of all board of directors and shareholder meetings.
• Limited Liability Companies (LLCs) – While LLCs enjoy more governance flexibility, it’s still essential that they maintain minutes to document significant decisions and safeguard the limited liability status of their members.
• Nonprofit Organizations – To preserve their tax-exempt status, nonprofits must typically keep meeting minutes.

How Often Do Companies Need to Take Meeting Minutes?

The frequency of maintaining meeting minutes varies depending on the company’s bylaws and state regulations, but there are some standard guidelines:

• Board of Directors – Typically, corporations are required to record minutes at board meetings, which are typically held quarterly. However, the specific frequency can vary based on the company’s particular needs.
• Shareholder Meetings – Most corporations are required to hold shareholder meetings annually, but many have them more often. While minutes are not required to be taken at every shareholder meeting, it is advisable to document the proceedings, especially during the annual meeting where critical decisions, like electing the board of directors, are made.
• Committee Meetings – This doesn’t apply to all businesses, but if your company has corporate committees, like an audit or compensation committee, it’s advisable to document these meetings as well.

Key Elements in Meeting Minutes

Meeting minutes need to be comprehensive and accurately reflect the discussions, decisions, and actions taken during the meeting. Here are the crucial elements that should be included:

1. Date, Time, and Location – The minutes should start with the fundamental meeting details.
2. Attendees – List the names of all meeting participants, including board members, shareholders, and committee members.
3. Agenda – To provide context, include a brief overview of the meeting’s agenda.
4. Discussion – Summarize key discussions and debates, especially any significant points made by participants.
5. Decisions – Document all formal decisions, resolutions, and motions made during the meeting.
6. Action Items – List all tasks assigned to attendees (or others not in attendance), along with deadlines and responsibilities.
7. Voting Results – The results of all votes, including the number of votes for and against, should be recorded.
8. Signatures – At the end of the meeting, the meeting’s chairperson and the secretary who prepared the minutes should sign and date them.

In addition, by stressing the importance of integrating meeting minutes with financial records and annual reports, your clients are assured financial decisions, such as dividend distributions or capital expenditures, are accurately reflected in both financial statements and meeting minutes.

Note to Accountants: Accountants are essential for guiding clients through the various financial and administrative aspects of running a business. And, advising them about maintaining accurate meeting minutes is a valuable service your accounting firm can provide. Understanding the state and/or federal laws that mandate keeping minutes for certain business entities, such as corporations and LLCs, is vital. Accountants can educate their clients about best practices for maintaining accurate and comprehensive meeting minutes.

It’s already November and we are rapidly approaching year’s end. This means the time has come for an annual business review. What is an annual business review? You might think this is the annual report  C Corporations and Limited Liability Companies (LLC) must file each year with the state. In truth, that is one part of the annual review process, the annual compliance filings, however, there is more to consider when reviewing your business.

The following are 10 areas of your business to review: the good, the bad, and the required to take your business into 2024 on solid ground.

1. Employee Changes

How did the year affect your business’s staffing needs? Did your company pivot to remote working? Did you look for workers outside your business’s home state?

When examining the employee question as part of your annual review, it’s essential to consider all aspects of your staff changes this year. At a bare minimum, address:

1. The use of independent contractors
2. Employing remote workers
3. New safety protocols for employees
4. Employing out-of-state workers and establishing nexus
5. Management mistakes and successes

There is so much more to cover, such as discovering employees’ strengths and weaknesses and dealing with employees’ safety. Make sure you spend time reviewing employee issues with managers and employees alike, so you get the full picture.

2. Technology

How did your business’s technology function this past year? Do you need any upgrades, such as faster computers, better cybersecurity, or tech solutions, to help manage remote workers? You also may have had to change your order and delivery system, communications, and more—all of which require new software applications to install and learn. Now is an excellent time to discuss your tech strengths and shortfalls with your team and see where you can improve.

3. Marketing

Were you one of the businesses quick to recognize how much consumer behavior changed in the past year, or did you move too slowly, resulting in a loss of customers? Your annual business review should cover your marketing activities—what worked and what didn’t. Also, take a look at the marketing tactics and strategies employed by your competition.

4. Insurance

As part of your annual business review, go over your business insurance policies with your representative to see what you need (and perhaps, don’t need). Your plan should focus on protecting your employees, customers, your physical space and equipment, your data, and maintaining business continuity. If you don’t already have a disaster plan in place, Ready.gov offers free preparedness planning toolkits to help assess risk and take action.

5. Finances

No one knows how inflation will continue to impact the economy in 2024 and it may take months before your profits and losses return to normal. As you do your annual review, create contingency plans for various economic environments, so you’re prepared for any scenario. If you plan on expanding your business in 2024, start researching business practices and register for payroll taxes and sales taxes in the states you’re targeting for expansion.

6. Licenses and Permits

Many business licenses and permits are renewable on an annual basis and require recertification and a renewal fee. If a federal agency regulates your business, you need a federal license or permit. However, most of the licenses and permits necessary will come from your city, county, and state business development offices.

Professional and niche businesses are often required to have various licenses and permits. Acquiring a specialty license means the business has the specific skills to operate a company in certain fields. Businesses include hair and nail salons, accountants, legal, plumbers, electricians, collection agencies, daycare, pesticide dealers, and more.

A business selling products and services subject to sales taxes will need a sales tax license from the state tax authority office. Do you sell in more than one state? You’ll need a license in each state. Sell taxable products on a wholesale basis to retailers? You’ll need a reseller license (resale certificate), which gives a business permission to sell taxable products without collecting sales tax.

7. Annual Corporate Filings

Most states require registered corporations and Limited Liability Companies (LLC) to file an Annual Report, also known as a Statement of Information, with the Secretary of State’s office every year. State governments want to maintain updated data on corporate activity, including information about the corporation’s directors, officers, any registered agents, and registered office of the corporation. In most states, there is a small filing fee associated with this filing. Did you miss some deadlines this year and need to reinstate your business so it can once again be in compliance? CorpNet can help you with the reinstatement filing process to bring your business back into good standing with the state.

8. Annual Meeting Minutes

Although meeting minutes are not required to be filed with the state, if you are an S Corporation or a C Corporation, most states require that you keep careful records of the company’s activities yearly. Every time your board of directors meets, you must keep a record on file for regulatory compliance purposes. Transactions and resolutions that must be kept on the record include:

• The appointment of a new officer
• The resignation of a director
• Purchasing insurance
• Selling stock
• Obtaining a line of credit/credit card in the company’s name

As part of your annual business review, the board of directors must hold an annual meeting to go over the past year’s details and decide on actions and strategies for the next year. Keep the minutes with your other corporate records, such as Articles of Incorporation, bylaws, and resolutions.

9. Closing a Business

Did you decide to close your business this year? Properly closing a business is just as important as starting a business. Not only could you get in trouble with federal and state governments, but your business’s reputation and credit strength are also on the line. If your business is a sole proprietorship, the decision to close is all your own. But, if you have partners, and are structured as a corporation or LLC, all co-owners and board members must agree. The process requires a formal vote that is documented and includes the signatures of all relevant parties. You must then file the correct forms with the Secretary of State’s office in the state in which your business was formed. These forms are called Articles of Dissolution, a Certificate of Termination, or a Certificate of Dissolution. If you don’t complete this step, you will need to continue to file any required annual paperwork and pay the fees associated with the business.

10. Foreign Qualifications

If your business expanded to other states or your plans for next year include expansion, you’ll need to foreign qualify your business. What is a foreign qualification? Foreign qualification is the process of registering a company in another state to conduct business in that state. States vary in what constitutes doing business, but in general, most states consider the following as business activities requiring foreign qualification:

• The business has a physical presence (office space, warehouse, or retail store) in the state
• The business conducts in-person meetings with clients or customers in the state
• The business is structured as an LLC, corporation, or limited partnership (LP)
• The business has employees living/working in the state

You’ll also need to register for a foreign qualification before you can apply for the state’s payroll and sales tax authorization.

Don’t worry if this sounds too complex. CorpNet is here to help you with all aspects of your annual business review. Get in touch today!

No matter the type of business you operate, taxes are among the expenses you must anticipate and budget for. While not the most pleasant aspect of running a company, business taxes require an entrepreneur’s attention and follow-through because penalties exist for not reporting and paying them on time.

Here’s a look at some federal, state, and local taxes small business owners should understand and prepare for.

Federal Business Taxes

Federal Income Tax

Businesses must pay income tax on their taxable earnings. The income tax rate depends on how the business is structured. At the time of this writing, C Corporations get taxed at the corporate tax rate of 21%. Income tax for pass-through entities — such as Sole Proprietorships, Partnerships, LLCs, and S Corporations — flows through to the business owners’ personal tax returns at the applicable individual tax rates (which presently range from 10 to 37%).

Income tax is a pay-as-you-go-tax. While tax returns are filed annually, most businesses must pay income tax via four quarterly estimated tax payments.

Deadlines for estimated tax payments are as follows:

• April 15 – For taxable earnings from January 1 to March 31
• June 15 – For taxable earnings from April 1 to May 31
• September 15 – For taxable earnings from June 1 to August 31
• January 15 of the following year – For taxable earnings from September 1 to December 31

Self-Employment Tax

Self-employment tax consists of Social Security and Medicare taxes, contributing to the business owner’s benefits coverage under the Social Security and Medicare programs. Individuals who work for themselves, operating as a Sole Proprietorship, Partnership, or LLC, do not receive a paycheck from their business from which Social Security and Medicare tax are withheld. Therefore, they must pay those taxes quarterly through estimated tax payments if their net earnings from self-employment are $400 or more in the tax year.

The tax rate for Social Security is 12.4% on earnings and the Medicare tax rate is 2.9%.

Employer’s Portion of FICA Tax and Income Tax Withholding

If a small business has employees, it is responsible for withholding federal, state, and local income taxes from their workers’ pay and submitting those monies to the appropriate tax authorities.

Note that employers only withhold half of an employee’s Social Security and Medicare tax obligations from their paychecks; the business pays the other half. In other words, the employer pays 6.2% of the employee’s earnings to Social Security and 1.45% to Medicare, while comparable amounts are deducted from the worker’s pay.

Keep Learning: What is FICA?

Federal Unemployment (FUTA) Tax

FUTA (Federal Unemployment Tax Act) tax is another payroll tax businesses with employees must pay to the federal government. The FUTA program works with state unemployment programs to pay benefits to workers who have lost their jobs through no fault of their own. No portion of the 6% FUTA tax is withheld from employees’ wages.

The first $7,000 paid to each employee during the year (after deducting any FUTA-exempt payments) is subject to FUTA tax. The maximum FUTA tax per employee per year in 2023 is $420 ($7,000 x .06). Generally, employers who pay state unemployment tax on employees’ wages can receive up to a 5.4% credit on their FUTA tax. A reduction to the 5.4% credit for FUTA tax is determined every year for each state based on the state’s Federal Unemployment Trust Fund loan outstanding balance (dollar amount and length outstanding) from the federal government for the current and preceding year.

Employers must report their FUTA tax liability annually, but quarterly tax deposits may be required.

IRS due dates for depositing FUTA tax:

• April 30 – If the undeposited FUTA Tax responsibility is over $500 on March 31
• July 31 – If the undeposited FUTA Tax responsibility is over $500 on June 30
• October 31 – If the undeposited FUTA Tax responsibility is over $500 on September 30
• January 31 – If the undeposited FUTA Tax responsibility is over $500 on December 31

Keep Learning: What is FUTA?

Excise Tax

Excise tax encompasses various industry-related taxes businesses must pay if they:

• Operate certain kinds of businesses.
• Manufacture or sell certain products.
• Use various kinds of equipment, facilities, or products.
• Receive payment for certain services.

Most excise taxes are charged according to unit sales, weight, or volume.

Excise tax liability is reported on a Quarterly Federal Excise Tax Return, which is due by the last day of the month following the end of a quarter. (For example, quarterly returns for the first quarter of the year are due by April 30.) Payments on most excise taxes are due twice per month, by the 14th day after each semimonthly period. So typically, one payment is due by the 29th of the month for the semimonthly period running from day 1 to 15 of the month and the second payment is due by the 14th of the month for the semimonthly period running from day 16 to the last day of the month.

Examples of taxes reported on the excise return include:

• Environmental taxes (e.g., domestic and imported petroleum oil spill taxes, ozone-depleting chemicals tax)
• Communications and air transportation taxes (e.g., transportation of persons or property by air)
• Fuel taxes (e.g., tax on the sale of diesel fuel, aviation gasoline tax)
• Ship passenger tax
• Manufacturers taxes (e.g., coal mined, vaccines, tires)
• Indoor tanning

State Business Taxes

State Income Tax

Most states levy income tax on business income. As with federal income tax, a company’s business structure often dictates the tax rate and whether the business entity or the individual owner must pay the tax. Note that a company’s business structure for tax and registration purposes may be different for federal and state tax purposes.

Some states impose gross receipts tax instead of — or in addition to — corporate income tax.

Tax rates vary from state to state. In most states for most businesses, tax returns must be filed once per year by April 18 with quarterly tax deposits made throughout the year as income is earned.

Just as employers must withhold federal income tax and FICA from employees’ pay, they must withhold state income tax from workers’ pay and submit those monies to the state.

State Unemployment Tax

Businesses with employees must also pay SUTA (State Unemployment Tax Act) tax or SUI (State Unemployment Insurance) in most states. Generally, SUTA is paid solely by employers, with no money withheld from employees’ pay. SUTA rates vary as do the maximum employee earnings subject to the tax.

State Sales Tax

In many states, businesses must collect sales tax from the end user at the point of sale if they sell taxable items or perform taxable services. Those monies collected must then be remitted to the state. Sales tax rates, reporting requirements, and deposit due dates vary depending on the state and amount due.

State Use Tax

Most states that levy sales tax also have a use tax. If a business buys items subject to sales tax but the seller does not charge and collect sales tax on the invoice or receipt they issue, the purchasing business must remit use tax to the state. Just like sales tax, the end user of the product is subject to use tax.

Generally, a state’s use tax is the same percentage as its sales tax.

Keep Learning: Sales Tax vs. Use Tax

State Excise Tax

Businesses in certain industries or that sell certain types of products might pay state excise taxes. The types of goods subject to excise tax and tax rates vary by state. Some items that may be subject to excise tax include wine and spirits, tobacco products, gas, and mobile phone service.

Franchise Tax

Some states impose a privilege tax, called a franchise tax, on LLCs (and sometimes Corporations). Income thresholds, tax rates, and due dates vary by state.

Local Business Taxes

Local Income Tax

Some counties, cities, and municipalities impose income tax on businesses operating within their borders. Rates and deadlines vary.

Note that businesses with employees in jurisdictions that levy personal income tax must withhold it from their employee’s paychecks and remit it to the local tax authority.

Local Sales and Use Tax

Some local governments levy a local sales tax on certain goods and services. The business typically collects the tax at the point of sale and then remits it to the proper tax authority (typically the state). Use tax applies if a business purchases taxable goods or services but the seller did not charge and collect sales tax on the purchase. Sales and use tax rates vary by jurisdiction.

Other Local Business Taxes

Many local authorities have other types of taxes as well. Many are passed along to customers at the point of sale and then remitted to the appropriate local tax agency.

Below I’ve listed some examples of additional local taxes:

• Amusement tax (imposed on admission fees for events and entertainment, such as nightclubs, concerts, movies, theaters, etc.)
• Hotel occupancy tax (imposed on fees for staying in guest rooms and renting banquet facilities in hotels, motels, inns, bed & breakfasts, etc.)
• Liquor tax (imposed on sales of liquor, wine, and beer)
• Parking tax (imposed on gross receipts from parking fees paid by customers to park or store a motor vehicle in a parking facility)

Understanding Your Small Business Tax Obligations

The first step to meeting your tax responsibilities is to understand them! Speak with a trusted accountant or tax advisor to confirm which taxes apply to your business, when they’re due, what tax IDs you need for registering to collect and pay them, and other mission-critical details. You can also find information about federal business taxes on the IRS website and about state and local taxes from your state and local government websites or by calling their offices.