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Wednesday, March 30, 2011

Who is making your required filings?

All businesses have regular filings that must be made, but who is actually responsible for making them?

  • "I think my CPA is handling this for me" you might say. This is a very popular answer to the question, but it isn't necessarily a good one. Some CPAs will take care of filings for you as a value add to their traditional services. However, assuming that they are doing it for you can be a costly mistake.

  • "My attorney takes care of all of those details for me" is a common thought. Are you serious? I am surprised at how often I receive this type of response, particularly since it is almost never true. Attorneys generally do not handle annual filings unless you are paying them a monthly retainer or other type of regular management fee.

  • "I don't have time to deal with that so I am not going to worry about it" might be your first thought. While you may not have time to deal with it, you better believe that you should be concerned about it because it is ultimately YOUR responsibility. This doesn't mean that you have be the one to do it yourself, but you definitely need to make sure that it is taken care of (on time).

  • "So if it is my responsibility, what happens if I don't do it?"This is not necessarily a short answer as there are a number of possible repercussions. At the very least, your business will be placed on Inactive Status with the Secretary of State's office and you are no longer considered to be in Good Standing. You can file for reinstatement, which will require a fee, but reinstatement is not guaranteed. Once you are placed on Inactive Status, it is possible for someone else to form an entity using the same name that you have operated with.

You may also want to consult with a professional advisor as there may be other filings or required certifications that may need to be addressed (depending on your business type).

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