With time of the essence, I won’t delay getting right to the point of this blog post:
Now is the time to get your company’s ducks in a row so your business will have a happy New Year. And by happy, I mean being prepared so you won’t suffer from the headaches and frustrations of falling behind on mission-critical responsibilities.
So, without further ado, here’s a helpful year-end closing checklist to guide you in closing your 2017 on a joyous note.
Your Year-End Closing Checklist to Make the New Year Merry and Bright
1. File to Change Your Business Entity Type
If you’ve decided to change your business’s entity type and want to get a clean start in 2018, I encourage you to file your registration documents by December 31. Most states will consider your new business entity effective January 1, if you file your formation paperwork after December 17.
I know, I know…this is a busy season. But there are some advantages to getting that filing done STAT so that the change will be effective on day one of the New Year. One major advantage is you’ll avoid the tax filing related hassles that come with switching your business structure mid-year.
Consider the following scenario:
You’re currently operating your business as a sole proprietorship, and you’ve decided (after consulting your attorney and a tax advisor) to change your business structure to a single-member LLC.
Rather than filing before 2017 ends, you drag your feet and wait until mid-year to file your LLC formation documents. As a result, your LLC status doesn’t become effective until June 5, 2018 (I chose this date at random; it might be some other month or day depending on when you file).
Under these circumstances, when tax time rolls around for the year 2018, you’ll need to file a tax return for your time as a sole proprietor from January 1, 2018 until June 4, 2018, and then another return as an LLC from June 5, 2018 through December 31, 2018.
Not only does this create more work for you, but it will also increase the fee you’ll need to pay to your tax preparer—after all, your tax person will be doing extra work, too.
Had you filed your LLC paperwork by December 31, 2017, however, you would only need to submit your 2018 tax return as an LLC. So much easier!
2. Don’t Delay your Annual Meeting or Annual Report
If your state requires you to hold an annual meeting and you haven’t done so yet, you have just days left to complete this compliance task. Remember also to generate written minutes and have your LLC’s members or corporate shareholders sign off on them.
And some states require LLCs and corporations to create annual reports every year or according to some other interval. If yours is one of them, you should move on this quickly, as well. If you’re not sure about whether either of these requirements applies to you, check with your attorney or your state’s Secretary of State office.
3. Notify Your State of Company Changes in 2017
If you’ve made any notable changes in the past year—such as a new business address, revision to your company’s name, departure of a member on your Board of Directors—you must file an “Articles of Amendment” to officially disclose them to the state in which your business is registered.
4. Review How Your Tax Payments Align With Your Tax Obligations
Have you underpaid or overpaid throughout the year? Now is the time to review whether your tax payments to date are in line with what you owe. If there’s a significant variance, you might want to adjust your final 2017 payment (which is due Jan 16, 2018) to offset the difference. Read more about our suggested small business tax tips.
5. Officially Close Your Business If It’s Not Active
If your LLC or corporation has been inactive and you don’t file paperwork to officially close it by year-end, it will cost you. Without formally telling the state your business has ceased operations, you will still be obligated to file reports, submit filing fees, and pay applicable taxes. To close your business, you will need to file an “Articles of Dissolution” or “Certificate of Termination” document with the state office where your LLC or corporation is registered.
6. Find Ways to Streamline How You Get Things Done
Think about how you and your team can work smarter not harder in the New Year. What administrative processes might you improve upon to eliminate unnecessary paperwork and open the bottlenecks that inhibit productivity? Investigate tools and resources that will help you manage projects more efficiently, collaborate more effectively, and do work more accurately.
7. Show Appreciation for Those Who Fuel Your Business Success
Now on to the softer side of business—before the year is over, continue to nurture the relationships you’ve built with your employees and customers. Show your appreciation with a heartfelt thank you in the form of a card, email, lunch at a favorite eatery, or appropriate gift. Spreading cheer and goodwill is always in season!
Santa Isn’t the Only One With a List That Should Be Checked Twice
Many of the tasks on the list above represent requirements for keeping your business in good standing with the state(s) in which your company is registered. Why is good standing so important? If you decide to seek funding or obtain certain services, you will sometimes need to present a Certificate of Good Standing to investors, lenders, and vendors to show your business is legitimate and trustworthy. And if you want to expand your business by registering your company as a foreign business in another state (foreign qualification), most states require that you have that certification in your home state.
Also, falling behind on compliance requirements could result in fees, penalties, and even the suspension of your business operations. All of which could dramatically hurt your bottom line.
Fortunately, you have an expert resource to help you get your filings done accurately and on time.
Contact CorpNet to help you take care of that year-end closing checklist. We can help with the business registration and reporting filings listed below, as well as many other items:
We’re here to save you time and money, help you meet deadlines, and give you peace of mind!