It’s the start of a fresh, brand new year! This is the time to do a general assessment of your business progress and set goals for the next twelve months. It’s also a time to do some housekeeping – business housekeeping, that is. So let’s talk about what you need to do to keep your business legally healthy.
First of all, you need to understand the importance of this housekeeping – what we call “keeping the formalities”. The formalities are mostly made up of paperwork that you need to do or maintain each year. Having these formalities helps you to keep the limited liability shield in place – which is one of the benefits of having a separate business entity. So these formalities are really important.
If you have a corporation or an LLC, here’s a brief list of some of the formalities you should be doing:
- File an Annual Report with the State of Florida (your entity will be administratively dissolved if you don’t!). The deadline is May 1st.
- Prepare Annual Meeting minutes – for Directors and for Shareholders.
* NOTE: For LLC’s, this is not required but it’s good business practice to do it for Managers and/or Members of the LLC.
- Keep all books and records of your business separate from your personal books and records.
- Do not co-mingle personal funds with business funds. Business funds should pay for business expenses and personal funds should pay for personal expenses. Separate bank accounts are a must!
Here are a few other business-related items that you should do each January. These aren’t necessarily considered “formalities” but you still need to do them:
- Review the status of any Fictitious Name registration. These need to be renewed every 5 years.
- Check any licenses and permits to see if they need to be renewed.
- Check the status of any trademarks, patents and copyrights. You will need to make filings at various time intervals, so keep track of these on your yearly calendars.
- Take a look at your lease if you have one. Does it expire this year? If so, when do you need to notify your landlord of a renewal? Calendar this date now so you don’t forget.
- Review your insurance policies. Have any changes occurred in your business that you need to account for in your policies? Calendar the dates of their renewals this year.
- Pay your taxes!
TIP: Make yourself a checklist of these items and print it out every January. This will keep you on track and keep your business healthy!
One last note – the smaller your business, the more important the formalities. This is because smaller businesses do not have many owners and there are less intrinsic motivations to keep things separated. It is easy to let these tasks slip by and ignore them – but that will leave you with a sloppy business and could expose you to personal liability. So buckle down, knock these things off your list and start off your new year with a legally healthy business!
ABOUT ELEVATE: At Elevate, we maintain an outlook of optimism while being realistic in protecting against what could go wrong. We believe in promoting great relationships between our clients and their clients – and we do that by creating service contracts they can use to demonstrate honesty and build trust.