When you register your business and incorporate
, it's essential to keep your business in compliance with the appropriate state's business laws. Failure to do what your state requires can result in a loss of your corporate or business protections, as well as punitive fees and penalties. Here are some of the basic things you can and should do to keep your business safe.
Make a Checklist
You can obtain all of the necessary requirements to maintain business compliance on your state's small business administration site. If you're having problems finding it, then you can access the United States' Small Business Administration site
. Through the search function, you can get direct links to your state's requirements. Next, prepare a checklist, complete with timelines and required paperwork, so you stay on top of these requirements.
Keep a Clear Paper Trail
If the state or creditors come to investigate your business, you need to be able to prove what you’ve done to keep your business in compliance. Whether it has to do with managing borrowed money or handling business assets, you must record your business's activities. Formal meetings and official Corporate Meeting Minutes
are two ways that you can establish a clear paper trail. Regularly balancing your checkbook and reconciling the books to bank statements also establishes proof. Most states don’t require all of these things, but they do allow them as evidence under the Federal Rules of Evidence, as adopted by the states.
Maintain Virtual Copies of All Receipts and Paperwork
Your business could easily amass quite a stack of paperwork, particularly if you follow the IRS's guidelines for business tax preparation and compliance. However, the government doesn’t actually require you to keep all of the originals. Virtual copies will work, and transferring your hard copies to digital ones will save you space. Accurately label your digital records, and you’ll be better organized, too. If space isn’t a problem, it’s best if you save all of your receipts as well. Even though the IRS only requires that you save receipts for business equipment of $75 or more, they will come in handy for proving business expenses if you’re ever selected for an IRS tax audit.
Disclose All Potential Conflicts of Interest
Corporations and LLCs are held to higher standards of disclosure than sole proprietorships. Even partnerships have heightened responsibilities. In all states, the crux of this responsibility and disclosure requires you, as the owner, to disclose potential conflicts of interest to other parties involved in running your business. You should do this in writing so there’s a record. Remember that having a conflict of interest doesn’t mean you cannot engage in a particular activity, unless another state law applies. It just means you have to make the conflict of interest clear from the beginning.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.