What Triggers a New License Application?

As your business grows, you may find that you need to make changes that impact your licensing. For example, you may move to a new office, prompting an address change, or you may experience changes in officers or directors. To ensure your state has the most up-to-date information about your business, you may need to submit a new filing to keep your license in good standing. Understanding the licensure process and your obligations is crucial to staying in good standing and remaining compliant.

Factors Triggering New License Applications

If your business needs to make changes to its original registration documentation, you may need to file a restatement of the articles of incorporation or articles of organization. Factors that may trigger a new license application include the following: 

• Change in address. Notify the secretary of state if you have moved within your state. Each state’s procedure is slightly different, but you will probably have to amend your organizing documents. There may be a small charge for this address change.
• Change of officers or directors. Changes in the names of directors, members, or managers of an entity may trigger the need to file a new license application. In states that do not require a new application, you will likely need to report the change on your annual report.
• Add a DBA (Doing Business As). Depending on the type of goods or services your business provides, you may need to secure proper licenses and registrations, just as you would when setting up a business. Once you understand what licenses or registrations are required when setting up your DBA, complete the appropriate paperwork and wait for the approval. 
• New EIN. Generally, businesses need a new EIN when their ownership or structure has changed. To obtain a new EIN, you will need to apply through the Internal Revenue Service (IRS). Once the new EIN is assigned, you can notify the appropriate state agencies.

There are two sets of compliance responsibilities to face when you undertake such changes. First, you must complete the organizational formalities necessary to authorize the change. Then, you must file the appropriate documents with the Secretary of State in your home state.

License Applications and Business Entity Conversion 

A change of business entity, also called business entity conversion or statutory conversion, is the legal process of converting your current business entity into another business entity without forming a new entity or dissolving your existing entity. If the state doesn’t allow for conversions, you will have to dissolve and start a new company. With dissolution, the original entity is dissolved, and a new entity is formed.

Changing your business entity is done through the Secretary of State. While each state has its own rules, there are generally at least three parts: a Plan of Conversion document, business formation documents for the converted entity, and a certificate of conversion.

• Plan of Conversion. A Plan of Conversion is a document of terms and conditions for the conversion, dictated by state statute. This document includes organizational information such as the converting entity’s name, the converted entity’s name, a statement of continuing existence, and a statement of approval for the conversion.
• Business formation documents. Business formation documents depend on the entity type you choose. You’ll usually file these with the Secretary of State simultaneously with the Certificate of Conversion, along with the required fees.
• Certificate of Conversion. The Certificate of Conversion is the document that officially puts your business entity conversion into effect. This conversion document includes basic information about both your converting and converted entities and the approval statement from the Plan of Conversion, effectiveness details, and tax status information. 

Beyond legal liability and taxes, changing your business entity could involve additional requirements. For example, if you are running a business that requires licensing, you will likely have to apply for a new license for your new business entity.

In Conclusion 

Your business can face fines, closures, delays, and other penalties without the correct licenses. Spare your business the time, expense, and potential mistakes. With Harbor Compliance’s managed services you can access our compliance specialists to handle initial registration, renewals, and special projects.

If you prefer to manage your licenses in-house, our License Manager software enables you centralize and maintain your current licenses and efficiently research and obtain new licenses. The foundation of License Manager is our nationwide database of licensing and filing requirements that helps keep your portfolio up-to-date.

Contact us today to learn more about our compliance software and services or schedule a demo.

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Harbor Compliance does not provide tax, financial, or legal advice. Use of our services does not create an attorney-client relationship. Harbor Compliance is not acting as your attorney and does not review information you provide to us for legal accuracy or sufficiency.