In the first post of this series, I shared the legal nuts and bolts of starting your accounting business. Without a doubt, they’re ultra-important to know, but the task of business compliance doesn’t stop after you launch your company.
You also need to pay attention to some ongoing requirements if you plan to make entrepreneurship your professional destiny.
Your Checklist For Keeping Your Accounting Business Legally Compliant
To keep your business in good standing, you’ll need to stay on top of the following things:
Renew your business licenses and permits
Make sure you know when you need to renew your license(s)—such as CPA and public accountancy—from the state to operate your public accounting services business. Because requirements vary from state to state, county to county, and municipality to municipality, you might also have other state and local licenses and permits to maintain. Keep tabs on all renewal deadlines, so you won’t miss them and get penalized for running your business without the necessary permissions.
Hold your annual meeting
If the state requires you to hold an annual meeting, make sure you do this every year. Also, remember to generate written minutes of what you discussed at your meeting and get members or shareholders to sign off on them.
File your annual report
Most states require LLCs and corporations to submit an annual report. Some want them every year or every other year, and others demand them less frequently. Pennsylvania, for example, only requires LLCs to file annual reports every 10 years to verify their business names or marks are still actively used.
Research the requirements that apply to you, so you don’t miss your annual report filing deadlines. Some occur on a specific date each year, at the end of the calendar year, on the anniversary of your formation date, or when your annual tax statements are due.
Keep your business and personal finances separate
Having set up your separate bank account and credit card for your business, don't muck up things by commingling your personal and professional monies. For legal and tax reasons, you need to maintain separation of those funds. If you don’t, you risk piercing that ever-important corporate veil that shields your personal assets if ever your business becomes the target of a lawsuit or runs into financial hardship.
Keep your business insurance policy up to date
Although forming an LLC or incorporating your business provides some legal protection for your company and you personally, it's not bulletproof. That’s why you should maintain your business insurance policies. Insurance coverage, such as a Business Owner’s Policy (BOP), Professional Liability Insurance, Data Breach Coverage, and others, provide additional peace of mind. But they only serve to protect if they're current. Pay your premiums on time, so they don't lapse.
Formally record any notable company changes
If you’ve moved your business, changed your company name, added a new board member, etc., you must officially notify your state through an “Articles of Amendment.”If you’ve registered your business as a single member LLC and have decided to add business partners, you will need to update your Articles of Organization and Operating Agreement with the names of the co-owners.
Note that some states require single member LLCs to dissolve and then re-form if there is any change in ownership, including becoming a multi-member LLC.
I can’t stress enough how critical it is for you to keep your business records with the state up to date. If your paperwork doesn’t reflect your business’s current information, it could jeopardize your personal assets if your company gets slapped with a lawsuit.
Officially close your company if you’ve ceased doing business
Although I hope you experience success in your accounting business, entrepreneurship doesn't work for everyone. If you've decided to stop running your registered business, you must formally terminate it. Otherwise, the state and other authorities won't know that you no longer need to file reports, maintain licenses and permits, or pay taxes.
To close your business, you will need to file either an “Articles of Dissolution” or “Certificate of Termination” document with the Secretary of State office. Take care of this as soon as you stop running your business, so you're not on the hook to pay taxes, fees, and penalties for a company that's no longer bringing in revenue.
Although it’s not a compliance requirement per se, another thing I advise you to do after you’ve been operating your business for a while is to evaluate your current business structure. It’s wise to review whether it’s still serving you well from a legal and tax perspective. Whether you’re set up as an LLC (Limited Liability Company), PLLC (Professional Limited Liability Company), or PC (Professional Corporation), talk with your lawyer and accountant to make sure it’s providing adequate legal protection and favorable tax treatment.
Make Compliance a Professional Priority
Remember that compliance (or lack of) can make or break a business. Find out which requirements apply to your business by contacting your state and local governments. I encourage you to consult with reputable legal and tax professionals for guidance, as well, so you fully understand what you must do and when you must do it to remain compliant. And to reduce the risk of forgetting or missing important filing deadlines, consider working with an experienced online business document filing company (like CorpNet) to keep you on track.
Nellie Akalp, CEO of CorpNet.com, is a passionate entrepreneur and small business advocate who is dedicated to helping other entrepreneurs start their businesses, incorporate, form an LLC and apply for trademarks. Along with her husband, Phil, they have formed more than 100,000 corporations and LLCs across the United States.