Keep your business in compliance with state and federal laws. Your legal responsibilities will depend on your business and location.
For your own records – internal requirements
To obtain licenses and permits to open a business, you must comply with internal and external requirements for compliance with business regulations. Most external requirements involve filing documents or paying taxes with state or federal governments.
Internal business requirements are for your own record keeping. You must document compliance with internal requirements along with company records. You may need them when you decide to sell your business or if legal action is taken against your business.
Requirements by business structure
Corporations have the strictest internal requirements. Corporations must hold initial and annual meetings of directors and shareholders, record the minutes of their meetings, adopt and maintain the bylaws, issue shares to shareholders, and record all transfers of shares.
LLCs have less stringent internal requirements, but are generally advised to maintain an up-to-date operating agreement, issue membership shares, record all transfers of membership interest, and hold annual meetings.
Other business structures have few, if any, internal requirements. However, it is rarely a bad idea to document important decisions with your business.
Ongoing state filing requirements
Your annual filing requirements will vary based on your business structure and state. Still, there are some common requirements to keep in mind.
- Annual report or biennial statement. Most states require one or the other. Some states set the expiration date to the anniversary of the business formation date, and other states choose a specific day for all businesses.
- Tax return filing fees. Fees normally accompany the annual report or biennial statement, which can exceed $ 300.00.
- Franchise tax. Some states collect franchise taxes for corporations or LLCs that operate across their borders. Formulas vary by state.
- Initial reports. Some states require initial reports and fees shortly after constitution.
- Articles of Amendment. If you have made major changes to your company – such as address, name, new shares, or membership – inform them with the articles of amendment.
Current Federal Filing Requirements
Most businesses will not have federal requirements beyond paying federal taxes and complying with the Affordable Care Act. Make sure you comply with all federal tax obligations, including income taxes and employer taxes.
The Affordable Care Act requires businesses with 50 or more employees to report to the IRS that they provide health coverage.
If your business has federal licenses, permits, or certificates, you’ll need to keep them up to date.
Other federal requirements
Some business activities are regulated but do not require filing. Make sure you comply with all marketing and advertising laws, copyright laws, workplace poster laws, and workplace health and safety laws.
Maintain licenses, permits and recertification
Documents to comply with the law vary depending on your industry and location.
Keep any licenses, permits, or certificates your business has received from your state, city, or county. Renewal requirements vary, so it is best to check with your local business licensing offices.
For example, most restaurants need to regularly renew health and safety certificates. Businesses that sell regulated items such as tobacco, alcohol, or tires may need to regularly renew their sales permits. For professional services such as plumbing or nursing, the state may require certification with a third-party board to maintain your license.
To obtain federal licenses, permits, and certificates, check with the issuing institution to confirm your business renewal requirements. Here is a list of some common federal agencies and departments that small businesses register with:
Formalized business example:
How to meet the requirements before undertaking
Nelson and Carol learned about the laws and regulations that your business must follow to ensure that it operates legally.
Nelson and Carol’s auto repair shop has to comply with state and federal business laws, as well as industry regulations.
As an auto repair shop, Nelson and Carol’s business has to follow environmental regulations regarding the handling of hazardous liquids and other materials. They check the website of their state Environmental Protection Agency and find a checklist of the regulations they need to follow and the permits they need to obtain.
Some of its employees have been trained and certified by organizations approved by the EPA in the proper way to handle hazardous materials. Nelson and Carol keep records of certificates and permits.
Part of complying with the law means paying all federal and state taxes. Additionally, Nelson and Carol renew their business license along with other local permits they need to continue within the code and operating regulations.
Nelson and Carol’s business is also required to display certain posters informing employees of their rights. They receive these posters free of charge from the United States Department of Labor.
Nelson and Carol’s business has met all filing requirements and is in compliance with the law.