Risk Management and Compliance

At every phase in their lifecycles, organizations have regulatory obligations to fulfill, from secretary of state registrations to business licenses to tax registrations, and everything in between. While it can seem like a lot of senseless paperwork, these requirements provide important transparency, access, and accountability to the public as well as government authorities.

Still, it is a lot of paperwork to manage, and it needs to be managed correctly, since an error or omission can lead to consequences such as penalties, citations, and loss of the right to operate in a given jurisdiction.

By understanding the requirements and accessing the right tools and support, organizations can reduce their paperwork burden and eliminate the risks of regulatory oversights and missed filings.

Gaining Authority to Operate

Wherever your organization operates, you must register with the secretary of state. This is done during formation in your home state or by qualifying to operate as an out-of-state or “foreign” entity in other states.

What constitutes “operating?” That question varies from state to state, but generally centers on activities such as hiring employees, opening offices, or offering services. (Compliance Specialist James Gilmer sheds some light in our prior blog post, here). We talk to clients all the time who are not actively registered in states where they have operations, either due to an oversight or a misunderstanding of how the regulations apply to their activities. If you’re unsure of your status, we can check it for you anytime.

Maintaining Good Standing

Once established, your good standing must be maintained with the secretary of state and the department of revenue. A certificate of good standing affirming your status is often required when opening a bank account, expanding into new states, or applying for a license.

Maintaining good standing requires annual reports, maintenance of a registered agent to receive official documents, and annual tax filings, among other requirements. In addition, corporate records must be kept up to date. This means notifying state authorities promptly of any changes in officers, directors, office locations, or other relevant information. With deadlines spread throughout the year, larger businesses and nonprofits will have state deadlines to meet monthly and in some cases weekly.

Tax Registrations and Filings

Understanding your organization’s tax liabilities is the provenance of specialized accounting firms that do nexus studies, but businesses are expected to determine their obligations and meet them proactively. It’s up to the business to determine where they have tax obligations, including sales and use taxes, payroll taxes, and income taxes. Similarly, the burden is on nonprofits to apply for tax exemption, file returns, and renew exemptions where required.

The Paperwork Shuffle

All of that paperwork must flow through the channels established by each state agency, which may mean submitting via an online portal, email, mail, or even fax. With so many reports to manage through such a wide range of media, it is easy for a state requirement to get lost in the shuffle. Often the error goes undetected until the organization receives notice that their good standing in a state has lapsed, which can lead to consequences such as loss of legal protections, reinstatement costs, penalties, reputation damage, and even administrative dissolution.

One way to safeguard your good standing is by using dedicated entity management software that interfaces with state databases. Our state-of-the-art software allows you to manage annual reports, registered agents, corporate records, and other filings in all 50 states from a single user-friendly interface. Users from multiple functional areas such as accounting and legal can share records, pull custom reports on demand, and monitor entity status nationwide in real time. In addition, our software lets you create automated reminders of upcoming deadlines.

If you want to eliminate the risks and the paperwork together, we can manage all of your requirements from beginning to end, freeing up high-value staff time for more central tasks.

Risks of Gaps and Errors

The risks of loss of good standing are substantial. Reinstating an entity is always more costly than renewing, in some cases by a factor of 20. Loss of good standing can damage your organization’s reputation and ability to win the trust of potential donors and clients. In addition, any lapse in good standing can jeopardize your legal standing in a state and expose officers and directors to personal liability for the organization’s legal and financial obligations. In some cases, these lapses can lead to administrative dissolution and permanent loss of your ability to operate in a state.

Licensing and Registering for Specific Activities

For companies in regulated industries such as architecture, engineering, construction, pharmaceuticals, and real estate, the need for professional licensing adds a further layer of complexity. Our License Manager software lets firms manage licensing along with corporate filings effortlessly from a single interface.

For nonprofits, tax exemptions and charitable solicitation registrations present unique challenges. We offer fully managed compliance solutions for all of these needs nationwide, so all you have to worry about is fulfilling your mission and increasing your impact.

Benefits of Managed Compliance

Our expert compliance specialists and state-of-the-art software can not only eliminate risk, but help your organization accomplish your goals and move with greater confidence wherever your mission takes you. A fully-managed solution can further eliminate the paperwork burden on your staff, freeing them to focus on tasks more central to your goals and success.

For more information on fully managed compliance solutions, feel free to contact us at 1-888-995-5895, or info@harborcompliance.com. We’ll be happy to demonstrate our Entity Manager and License Manager software solutions and take the work of state paperwork off your plate.