Of course, the recipe is different depending on your industry, market, and offering.

However, one thing all successful LLCs have in common is they remain in compliance – year-in and year-out.

6 Requirements for Keeping Your LLC in Compliance

Fortunately, staying compliant with government regulations doesn’t need to be a herculean challenge.

Provided you understand what’s required, earning your Certificate of Good Standing can become as routine as all of your other annual endeavors.

Here are the six steps you need to take:

1. File Your Annual Reports

Sometimes called your “Statement of Information,” most states require you file some type of annual report – though it might only be necessary to do so every two years in your state.

Check your state’s website for the exact requirements, including the date it must be filed. Missing the deadline could incur penalties as well as the dissolution of your business.

2. Keep Accurate Records of Internal Affairs

Technically, this isn’t a strict requirement for LLCs, like it is for corporations.

Nonetheless, it’s always wise to record Minutes of Meetings and document any other important events, like changes in operations or standards and even business transactions.

3. File Articles of Amendment as Necessary

You may need to file Articles of Amendment if your business has been through a major change. This could include anything from updating the management-style of the business to an address change.

4. Be Sure You Have Permission to Do Business Out of State

If you decide to conduct business in any state besides the one in which you formed your LLC, you must receive permission to do so.

Usually, this means applying to become a Foreign LLC within the state you wish to operate.

The actual name of this form differs from one state to the next, but it’s usually filed with the Secretary of State’s Office. Depending on the type of business you run, you may also need to apply for certain licenses and permits, too.

5. Keep Your Personal and Business Finances Separated

If you’re a small business owner, make sure your personal finances and business finances never overlap. Aside from the headaches this will cause come tax time, this will also make your finances much easier to understand for government officials.

6. File DBAs for Any Other Names You Use

Have you begun doing any business under a name other than your LLC’s official title? If so, you may need to complete a DBA (Doing Business As) or fictitious name registration.  This even includes simple variations, such as adding “.com” to the end of your company’s name or shortening/abbreviating one of the words.

Prioritize Your Certificate of Good Standing

If your LLC is successful in every other area, it can be easy to forget about the importance of your Certificate of Good Standing.

Unfortunately, that’s a mistake that could eventually lead to administrative dissolution.

So, now that you understand what’s required to remain compliant, make every effort to prioritize these steps and you’ll have no issues remaining on the government’s good side.

However, legal help is something you should consider in the beginning of getting your business off the ground.  Hiring a lawyer will ensure you’re compliant with the law and resolve potential legal problems before they start. It will end up saving you money and headaches in the long run.

At the most basic level, start-ups need lawyers to help them deal with three groups:

• The government: You also need to be sure you are doing business in a way that doesn’t create unnecessary tax liability and that you pay the taxes you owe.
• Third parties and the public: It’s essential to make sure you take reasonable steps to control risk in your interactions with customers, suppliers, users, employees, and the general public.
• Each other: When multiple people form a company together, it’s best to establish the rights and expectations of the founders upfront in case there are disagreements down the line.

If you’re on a limited budget, which legal priorities should you focus on?

• Establishing a business entity of some sort (LLC or corporation) to protect you personally from business liabilities
• Establishing the ownership and equity rights of the company if there are multiple founders
• Ensuring the business’ intellectual property is protected and owned by the company (especially if it is being developed by independent contractors)
• Making sure you are paying attention to the tax consequences of what you do

If you need help with determining the cost for using a small business lawyer, contact LexLaunch to discuss your options.  When you’re starting a new business we know every dollar counts.

We’re here to help you get the personalized legal advice you need at a price that won’t break your budget. We offer personalized small business setup plans at reduced rates from typical hourly fees. Click here to view our plans and pricing.

3 Steps You Must Take When Winding Down Your LLC

Despite what many people think, it’s not as easy as just closing your doors and taking down your site. Successfully winding down your LLC requires you take the following steps.

1. Take an Official Vote

The first thing you need to do is hold an official vote with your shareholders, stakeholders, or any other “member” of your LLC. You need to reach an agreement to close your LLC.

Be sure to record this vote either in the minutes of your meeting or document it via a written consent form. Then, secure proof of this vote – and its outcome – in your LLC records book.

2. Complete Your Dissolution Forms

Next, go to your state’s corporations division or secretary of state website to download the Certificate of Dissolution you’ll need to complete. Other names for this document include articles of dissolution and certificate of cancellation.

In some states, you may need to indicate whether or not all of your LLC’s debts and liabilities have been covered and what will happen to any of your remaining assets.

Once you’ve filled out this form, send it in with a cover letter that indicates the name of your company and its LLC number. Include your name, address, and telephone number, too.

Check to see if your state charges a fee for filing it. If they do, you’ll need to send it in with your form. It’s a good idea to use certified mail and request a return receipt, so you’ll know when it was successfully delivered.

3. Cancel Any State Qualifications or Registrations

If your LLC qualified to do business in any other state besides your own, you must withdraw your right to continue doing so. This will also require an official form, usually called one of the following:

• Application of Withdrawal
• Certificate of Termination of Existence
• Certificate of Surrender or Right to Transact Business
• Termination of Registration

4. Don’t Forget About Your Tax Obligations

Before you can officially close out your LLC, you need to make sure you comply with the IRS.

This includes:

• Filing an annual return for the year in which you’re closing down
• Filing your employment tax returns (if you have employees)
• Depositing your final federal taxes

Fortunately, the IRS provides a helpful checklist that covers all the essential steps in detail. While each of these may not apply to your business, it’s still a good idea to review them before moving on.

Create a Plan for Winding Down Your LLC

As you can see, closing down your LLC isn’t something you can do overnight. It takes a plan and then it requires careful execution of it. By dedicating the time to coming up with such a plan, you can move on to your next venture without worrying about any loose ends holding you back.

3 Misconceptions About the Protection Offered by LLCs

Before you start a Missouri LLC or Kansas LLC, it’s vital that you know what exactly that kind of protection it will offer.  Even a minor misunderstanding could cost you dearly.

1. An LLC Will Protect My Personal Property

It’s true that if you form a Missouri LLC or Kansas LLC, you’ll create separation between your personal and business assets. If someone sues your company, you can’t be legally compelled to use your personal assets to pay them if you lose.  However, some owners form a Kansas LLC or Missouri LLC thinking that will protect personal property they classify as business assets.  For example, you can’t put your beloved fishing boat in your company’s name in case someone sues you. Unless the boat serves a proven business purpose, creditors will probably have no problem going after it.

2. Forming an LLC Is Enough to Benefit from Its Protection

Another widespread misconception about the protection received when you start a Missouri LLC, or Kansas LLC is that this benefit is automatic. Far too business owners file to become an LLC and leave it at that. Unfortunately, they end up learning the hard way that this wasn’t enough to protect their assets after losing a lawsuit.  This is why it’s so important that you seek legal advice when forming an LLC. Aside from filing to become an LLC, you also need to create an operating agreement. Even if you own the business and you have no partners, this kind of contract will establish a formal separation between you and your business.
Otherwise, it could be easy to make the argument that while you have formed an LLC, it acts as just an extension of personal finances.  This operating agreement should formally define the powers you have as the business owner.

That would include things like:
• Opening a bank account
• Signing contracts
• Taking on debt

Basically, it’s a list of every action you need to take on behalf of your business.  Then, if you ever need to take any actions that are out of the ordinary (e.g., make a significant change to a longstanding line of business or take out a large loan), enact a special resolution. Again, this is another formal step you can take to make it clear to the authorities that you and your company are two entirely separate entities.

3. Starting an LLC Defends Against Personal Liability

Unfortunately, even if you take the above steps to create sufficient separation between your personal and professional finances, you can still face personal liability after you start a Missouri LLC or Kansas LLC.  In short, this would happen if you leveraged your personal finances to help your business.  One typical example would be personally guaranteeing a loan you need for your company. This happens a lot during the early days of a business when the organization hasn’t built up sufficient credit yet.

However, by doing this, you’re giving up the limited liability protection on your debt. So if your business can’t pay back what you owe, you’ll be held personally responsible.

Get Experienced Legal Advice Before Starting an LLC

It still makes sense to start a Kansas LLC or Missouri LLC.  You need to speak with a legal expert before proceeding to ensure you receive all the protections you’re due.  At Lex Launch, we can help. Give us a call today at +1 (816) 434-6610, and we’ll walk you through how we’ve helped other business owners just like you make the transition to an LLC the right way, so they enjoy peace of mind knowing they’ll enjoy every benefit involved.