Running your LLC or corporation comes with certain legal and financial commitments. Meeting these ongoing compliance requirements keeps your business in good standing. Your commitments will vary depending on whether you’re running an LLC or a corporation and the states where you run your business.
In this guide, we’ll look at general, overall compliance requirements and discuss specific ones for the four most popular business formation states: California, Delaware, Florida and Texas. We’ll start with general requirements, then move on to LLC compliance requirements and corporation compliance requirements.
Maintain a Registered Agent Who Can Accept Legal and Official Correspondence on Behalf of Your Business
All LLCs and corporations are required to provide the details of a Registered Agent to the business formation agency in their state. This Registered Agent must be available during business hours to receive legal documents and official correspondence on behalf of the business. This requirement is true in all states, including California, Delaware, Florida and Texas.
Incfile provides a complete Registered Agent service for all 50 states.
Submit Periodic Reports to the Business Formation Agency in Your State
Depending on the state you operate in, your LLC or corporation must file a report with the business formation agency in your state. Most states require you to file an annual report each year, although some states require them every two years, and other states don't require them at all. There is normally a fee associated with this filing. You can find out about your reporting requirements using Incfile’s ongoing compliance tool.
- Delaware LLCs must pay franchise tax every year. Delaware corporations must file an annual report and pay franchise tax every year.
- California LLCs must file a “Statement of Information” every other year and pay franchise tax every year. California corporations must file a “Statement of Information” and pay franchise tax every year.
- Florida LLCs and Florida corporations must file an annual report every year.
- Texas LLCs and Texas corporations must file a Public Information Report and a Franchise Tax Report every year and pay a franchise tax fee.
Update Information About Changes to LLC or Corporation Structure, Officers and Similar
If there are significant changes to your corporation or LLC, then you must update your state’s business formation agency by filing the relevant forms. Some of the reasons that you may need to file and update information include:
- Change of Registered Agent
- Change in the officers or members of a corporation or LLC, including names and addresses
- Change in the name of your business
- Change in your business address
- Changes to the legal status or entity type of your business
- Dissolution of your business
There may also be other times when you’re required to update business information. Check your state’s agency websites for more information.
Maintain Business License Requirements for Your Corporation or LLC
Many corporations and LLCs are required to have business licenses that must be updated and paid for on a regular basis, typically every year. Business license requirements vary significantly depending on the types of products and services you sell, professional qualifications, the sectors you operate in, where you’re located and numerous other factors.
For example, licenses might include state or federal tax identification numbers, seller permits, membership in a professional organization, renewal of qualifications or certificates, building permits, occupation permits, health permits, etc.
Incfile provides a complete Business Licenses and Permits service that will let you know about all of the permits and licenses that you will need to apply for and maintain. In addition to federal, specialized and other types of business licenses, others required by particular states include:
File and Pay Relevant Taxes with the State and the IRS
You will need to keep up with your tax obligations. These can be complex, so we recommend speaking to a qualified tax professional or accountant about your individual and business tax circumstances.
Typically, your business will be liable for the following taxes:
- Sales tax in your state if it is charged on the products and services you sell
- State employment taxes on the wages you pay to employees
- Payroll taxes on the wages you pay to employees
- Other taxes like property taxes, franchise taxes or local and municipal taxes
- Your business may also be required to file additional tax forms
If you run an LLC or S Corporation, your earnings from the business will “pass through” to your personal tax return, where you will pay:
- Federal income tax
- Federal self-employment tax
- State income tax, if it’s charged in your state
C Corporations will also file and pay corporation tax.
You and your business will also need to pay periodic taxes throughout the year, such as estimated taxes on your earnings or regular sales tax payments.
LLC Compliance Requirements
LLCs do not have specific or mandatory compliance requirements outside those listed above. However, it is still a good idea to:
- Introduce, maintain and update an Operating Agreement for the owners of the business. In New York, your Operating Agreement must be filed with the state.
- Issue membership shares.
- Record interest transfers.
- Hold and minute annual meetings.
Corporation Compliance Requirements
Corporation requirements are much more strict than LLC requirements. In addition to the general compliance we’ve discussed above, corporations must also:
- Hold and properly document director and shareholder meetings, including an Annual General Meeting.
- Prepare and record minutes for these meetings that are then agreed upon by all participants.
- Draft, agree and document major corporate resolutions and decisions. You will document these in your corporation record book.
- Create, adopt and update bylaws as needed. Bylaws lay out the corporation’s basic operating principles, and they should be planned for and drawn up as part of the incorporation process.
- Issue stock to shareholders and record stock issues and transfers.
- Maintain an accurate stock register.
- Maintain corporate records.
- Record and file the names, addresses and other information about corporate officers or directors.
We hope you’ve found this guide to corporation and LLC compliance requirements useful. Remember that Incfile is here to help with many of the aspects of running your LLC or corporation.