{"id":3773,"date":"2018-10-30T14:10:09","date_gmt":"2018-10-30T18:10:09","guid":{"rendered":"https:\/\/www.harborcompliance.com\/blog\/?p=3773"},"modified":"2022-11-22T15:11:11","modified_gmt":"2022-11-22T20:11:11","slug":"spooked-by-licensing-ten-frightful-filing-traps-and-how-to-avoid-them","status":"publish","type":"post","link":"https:\/\/www.harborcompliance.com\/blog\/spooked-by-licensing-ten-frightful-filing-traps-and-how-to-avoid-them\/","title":{"rendered":"Spooked by Corporate Licensing? 10 Frightful Filing Traps and How to Avoid Them"},"content":{"rendered":"
\"\"<\/div>\n

Many of the people at the licensing boards and other authorities we deal with every day work hard to make licensure and corporate filings run smoothly. Still, hidden within the labyrinth of 150,000 licensing agencies, each with its own set of rules and procedures, dead ends and dark alleys await the unwary filer. To help you avoid a nasty scare, our specialists have gathered their top ten most frightful filing traps and tips for steering clear of them.<\/span><\/p>\n

1. Ghost Rules<\/b><\/h2>\n

In one state, applicants for a corporate license must handwrite their name on the state\u2019s application form. No space is provided for this, and there are no instructions indicating you should print your name between the spaces. Yet the entire license application will be rejected if you don\u2019t. You learn by experience to write it in.<\/span><\/p>\n

2. Evil Twins<\/b><\/h2>\n

In most cases, wherever you enter a company\u2019s full name in an application, you must include corporate designations such as LLC or Inc. In fact, in one jurisdiction, simply leaving the periods out of a designator even once in an application can get you rejected. There\u2019s one state, however, where the application for a certificate of authority asks for the company\u2019s full name, then provides a separate field for corporate designation. If you enter the full company name and then enter the designator in the field, the company\u2019s name will be registered with double designators\u2014and you\u2019ll have to file a name amendment to get the extra one removed. <\/span><\/p>\n

3. Cryptic Choices<\/b><\/h2>\n

In one state\u2019s online system, there\u2019s a tool for uploading a certificate of good standing. The user is confronted with two options: a top button reading \u201cFile an image\u201d and a second button reading \u201cAdditional image.\u201d Which would you choose? If you went for the first, you would be in good company\u2014but you would also be rejected. You learn to choose number two.<\/span><\/p>\n

4. Dead-on-Arrival Filings<\/b><\/h2>\n

We once submitted an application for a state license from an international company. The administrator at the licensing board had never handled that type of filing and wasn\u2019t sure how to process it. She did what a lot of us do when confronted with uncertainty: she placed it on a pile, which made its way to the floor, where it would have expired if our specialist hadn\u2019t followed up repeatedly to revive it. In licensing, follow-through is everything.<\/span><\/p>\n

5. Nameless Horrors<\/b><\/h2>\n

In most states, a name availability search is conducted to determine whether you can register under the name of your choice. In one state, however, there\u2019s no way to search name availability in advance, and the state won\u2019t confirm it over the phone, either. The only way to check if a name is available is to submit an application and see if it gets rejected. You have three chances on the application\u2014after that, you\u2019re starting over.<\/span><\/p>\n

At the other extreme, there\u2019s one state where professional firms have to obtain an approved certificate of authority from the licensing board before filing formation documents with the secretary of state. Then, despite the fact that their name has already been approved, they have to file a separate name reservation anyway. Because . . . paperwork.<\/p>\n

6. Dead Ends<\/b><\/h2>\n

One particularly challenging state has detailed requirements for financial information. When applying for a certificate of authority there, you are confronted by four fields seeking financial information on matters such as the value of all property within the state. If you don\u2019t have any property in the state, you can\u2019t enter zero. You might think you should then leave it blank, but if you do, your entire application will be rejected. In fact, to get the application processed, you have to enter a number other than zero, even if the correct answer is zero.<\/span><\/p>\n

7. Zombie Fees<\/b><\/h2>\n

One state imposes a flat fee for filings, but then calculates additional fees based on your financials. The state will not disclose those fees, or the formula on which they\u2019re based, up front, even if you call and ask. You just have to file and wait to see if any additional fees pop up.<\/span><\/p>\n

8. Regulatory Gauntlets<\/b><\/h2>\n

In some states, the path to licensure is guarded by the regulatory equivalent of a larger-than-life wizard shouting \u201cYou shall not pass.\u201d One state with a rejection rate of more than 80 percent publishes a list of reasons for rejections on the site\u2014and there are 23 of them. Getting rejected is particularly painful there, since approval times are currently measured in months rather than days.<\/span><\/p>\n

9. Candy Thieves<\/b><\/h2>\n

In many states, if any gap or misstep is discovered in a contractor\u2019s license, the client can deny payment for all of the work completed on the project, even if it\u2019s perfect. Actually, that\u2019s a lot worse than having the neighborhood bullies take off with your entire pillowcase full of treats.<\/span><\/p>\n

10. TP<\/b><\/h2>\n

Yes, our Halloween list wouldn\u2019t be complete without a little toilet paper, in this case strewn all over the trees of homeowners who hire unlicensed contractors. In multiple jurisdictions across the U.S., homeowners are now guilty of a crime if they hire an unlicensed contractor. In some cases, they\u2019re subject to longer periods of incarceration than contractors working without a license!<\/span><\/p>\n

Stay on the Well-Lit Path to Compliance!<\/b><\/h2>\n

Follow these safety tips when you venture into the regulatory streets:<\/span><\/p>\n