If you have a corporation or other business entity (Corporation, LLC, LLP and so on), you shouldn't just "file it and forget it"!
Once you have established a business entity, there are certain requirements for keeping it "in good standing" here in the Lone Star State. (Other states, too, so if you are following us from out of state, be certain to check on the requirements in your individual state).
Here is a checklist of some important tasks to keep in mind:
- Don't lose your "good standing". Make sure that you file the proper forms and pay any franchise or other state taxes or fees in a timely manner. (You can check to see if you are in good standing by searching the Texas Secretary of State's SOS Direct.). Your CPA can help you if you need assistance with taxes, penalties or late filings.
- Keep up with your corporate books. I know, that's the task that everyone dreads! However, keeping up your books can be a lifesaver in the event of an audit of any kind, a sale, buy-in, or temporary shake up. The books should contain documents or lists that indicate banking relationships, compliance issues, contracts that are in effect, and major changes that have happened, as well as the dates of corporate meetings and historical indication of when important decisions were made.
- A good time of year to update all of this information is either 1) beginning of the calendar year; 2) tax time; 3) beginning or end of your fiscal year (if different from the calendar year).
- A business attorney can help you bring your corporate books up-to-date if you feel that you have gotten hopelessly behind. The attorney can help in one of two ways: 1) doing the actual updates for you with information that you provide and organize or 2) meeting with you, listening to what has happened with your company and then telling you what you can do yourself to update your books and records, which can save you money.
- Suggestion: review #2, above and ask yourself what are the major events/decisions that have happened in your corporation since the last update (which may be all the way back in time when the entity was filed with the state). Make a list of these events, and who made the decision to go ahead, and the dates. Gather the documents together in one place. Then follow the format that is in your book and decide whether you will update it yourself or if you need help from a lawyer or accountant.
Also, if you have a DBA (assumed name) in one or more counties remember that those need to be renewed every 10 years. Don't let yours lapse so that you become vulnerable to a competitor.