Legal Tips for Wrapping Up End of Year

With just a few short weeks to go in the year, it’s easy to get overwhelmed with closing out end of year business, not to mention your own holiday planning and parties. However, during this busy time, you should also make sure your business is “legally fit” for the upcoming year.

After all, what better gift could you give your business than making sure all your legal ducks are in a row?

I’ve compiled  a quick checklist of some of the legal aspects you should consider for your small business before the end of the year and in January.

Legal Tips for Wrapping Up End of Year

1. Incorporate or change your business structure

Maybe you started out as a sole proprietorship or partnership, but now are ready to evolve to a formal business structure. Many small businesses decide to incorporate (by forming a corporation or an LLC) in order to protect their personal assets from any financial risk of the business, as well as to get more flexibility when it comes to taxes.

You can do some free research on CorpNet.com to figure out what business structure is right for you, and submit your paperwork before the end of the year or in early January.

2. Close an inactive business:

If you have any kind of business that is no longer active, you need to file a formal termination with the state. For example, if the business is an LLC or corporation, you need to file an “Articles of Dissolution” or “Certificate of Termination” with the state.

Otherwise, you’ll still be expected to file an annual report and pay your annual dues for the business (and these fees will just keep racking up year after year!). Likewise, you should also cancel any kind of permit or licenses you hold with the state or county, such as a resellers’ license or sales permit.

Be sure to get all this paperwork in while it’s still 2013 to avoid having to pay any fees for next year. There’s no reason to pay an extra cent in fees toward a business you’ve essentially retired – there’s a lot more you can do with that money!

3. Review your estimated tax payments for the year

As we near the end point for 2013, review what your business has made year to date and assess the estimated tax payments you’ve made so far. Are you on track, under, or over? You’ll want to adjust your final 2012 payment (due in January) as necessary.

4. Hold your annual meeting for your Corporation or LLC

If you’ve gone through the work to incorporate your business, make sure you keep it in good standing. If you haven’t already held an annual meeting for your corporation or LLC, make sure to get one in before the end of the year.

Along with the meeting, you’ll need to generate written minutes/resolutions to be signed by the shareholders (Corporation) or members (LLC). And in most states, you’ll need to submit an Annual Report to the state.

5. File any changes with the state

If you made any changes to your Corporation or LLC (for example, you changed your business address or a board member left), you’ll need to file these changes with your state. In most states, this paperwork is known as “Articles of Amendment.”

While this type of paperwork may seem pretty trivial, it’s critical to keeping your LLC or Corporation in good standing. Note that this is something you can do either in December or January.

6. Address any loose ends

December and January are perfect times to tie up any loose ends for your business. Are all your licenses and permits in order? Does your business need a DBA (fictitious business name)? Do you have a Tax ID number?

The next few weeks and months will be busy, but don’t let your business’ legal and administrative obligations fall through the cracks. Stay on top of these important activities in order to avoid costly penalties and make sure everything is legit.

Here’s to a happy, healthy, and prosperous new year!

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Nellie Akalp

CEO of Corpnet.com at Corpnet
Nellie Akalp is a serial entrepreneur and small business expert. She currently serves as the CEO ofCORPNET.COM, an online legal document filing service, where she helps entrepreneurs START A BUSINESS, INCORPORATE, FORM AN LLC, and offers free BUSINESS COMPLIANCE TOOLS.
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