It is important to keep your corporation in good standing. Maintaining good standing allows companies to secure financing, expand into foreign markets, and conduct business transactions. Read on to learn more about how to keep your corporation in good standing and how we can help.
File Timely Annual Reports to Maintain Good Corporate Standing
Corporations are required to file an Annual Statement of Information with the Secretary of State. The statement details your primary business and registered agent location, including your members and directors. The Secretary of State will send a friendly reminder for your business to file the statement 90 days from the annual anniversary date.
A hefty fine will be assessed against your corporation if the report is not filed in a timely manner. This may lead to a corporation being dissolved and incidentally jeopardize a company’s liability protection, operating agreement, financial loans, and insurance obligations. Contact us for more information on how we can file your annual statement in a timely manner.
Always Maintain a Registered Agent
Corporations are required to maintain a registered agent. A registered agent is legally assigned to receive service of process on behalf to the corporation. All registered agents are required to maintain a physical address in California and specify business hours. If you need help finding a registered agent, contact us to find out how we can help you.
Pay State Business Taxes in a Timely Manner
In order to maintain good corporate standing while operating in California, your business should strive to pay state franchise taxes in a timely manner. Under California State law, both C and S corporations are subject to paying franchise taxes. Failing to pay taxes can result in severe legal consequences. Hire a tax specialist to make sure your company is in compliance with paying its tax obligations
Maintain Corporate Formalities
California Corporations Code requires shareholder meetings to be held annually and directors meetings to be held on a regular basis. Well drafted corporate bylaws should address the frequency of each meeting and all parties required to attend. Failing to observe company formalities, such as holding annual meetings and maintaining corporate minutes, could result in the “corporate veil” being pierced if legal disputes arise. Corporations who seek to maintain good business standing should make sure such practices are occurring.
Update Business Licenses and Permits
Finally, make sure you update your business operating licenses and permits on an annual basis. Most municipalities throughout California require corporations to obtain a business license while operating within their locale and any applicable permits. Such items must be renewed on a yearly basis.
Foreign corporation requirements
A Certificate of Good Standing, commonly referred to as a Certificate of Status, is issued by an authorized public official of a foreign jurisdiction under which the foreign corporation is incorporated. The state of California requires corporations to file a Certificate of Good Standing prior to obtaining foreign qualification. The certificate helps to ensure that a corporation is in compliance with state laws.
Following our tips above will help ensure your corporation does not jeopardize its good standing. Let us worry about the details of maintaining your company’s corporate status so you can focus on business growth. We invite you to contact us to find out more information about how we can help you. A People’s Choice provides low-cost legal document assistance to foreign corporations operating in California. You do not need to spend thousands of dollars in attorney fees to keep your foreign corporation in good standing. Contact us today to get started.