When dealing with LLCs, what the government gives, it can take away if the LLC owner fails to comply with state requirements.
If you are going from a sole proprietorship to an LLC, it’s a good idea to know exactly what the annual requirements are so that you do not lose your “good standing” with your Secretary of State’s office. If you don’t, you could be leaving yourself open to the kinds of legal difficulties you were no doubt trying to avoid by forming your LLC in the first place.
The first step is to know your state’s annual requirements for maintaining your LLC. Make certain you have filed every piece of documentation needed by your state in order to comply with your state’s laws. At the very least, you will likely need a federal ID tax number from the IRS, as well as certain licensing and tax requirements.
In addition, most states require LLCs to pay an annual licensing fee to renew your business license. If you don’t pay, you could lose your status. You may also be responsible for several different taxes, including payroll taxes, property taxes and sales taxes. Because each state’s requirements vary slightly, you need to know the specific requirements of your state.
While one of the attractions of LLCs is that they are far less formal than corporations, LLC owners must still maintain a certain amount of formality when dealing with the state. All LLCs have an operating agreement that outlines ownership and members’ information. Any chances in that operating agreement, such as a change in member interest in the LLC, must be filed with your state.
If your LLC does business in other states, the it must be registered in every state it does business in. You must register as a “foreign” LLC, which simply means that your main headquarters is located in another state. Again, neglecting to do so can leave yourself and your company open to legal problems. If you operate in a state that does not recognize your company, any protections you LLC affords you will not exist.
Roberto Neuberger is President and CEO of ActiveFilings.com which has over 8 years experience forming over 39,000 corporations, LLC’S and non-profits.