Running a business under an LLC umbrella brings many benefits. Simple formation, flexible taxation, and management system with fewer formalities and less paperwork to cover are to name a few. On the other hand, though, established business entangles quite a number of responsibilities. And maintaining your LLC compliant with the state is a major one. Unless your company is in good standing with the state, your business might be limited in many important aspects or even administratively dissolved. So, it’s advisable that, after LLC formation, you check your business compliance from time to time to make sure your company remains approved by the state and can lawfully operate on the market. Wonder how to check your LLC status? Keep on reading to find out.
An LLC Status: the Basics to Match
Once your LLC is officially formed and registered with the state, to get it fully on its feet, you’ll have a number of state requirements to handle that will also maintain your LLC status. What are the aspects that make up a good LLC status you wonder? Usually, those are as follows:
- Taxes: Though, by default, LLCs are free from state and federal income taxes that pass to the personal tax returns of LLC owners, some states have fixed taxes and fees to be settled by all businesses. Besides, if you have hired employees or run commercial activities, you might need to register for some additional taxes in your city or county. So, once you establish a legal entity, check with your state or local Revenue Department what types of taxes your LLC qualifies for;
- Licenses and Permits: Most states have special licensing requirements for some types of activities, professions, and industries. Thus, to open a cafe, run doctor’s practice, or operate a food enterprise, for example, you’ll certainly have to get some sort of licenses and permits. Note that those can be issued at a federal, state, and local level. Hence, mind to check the licensing rules with your state department before getting your business up steam;
- Annual filings and reports: To make sure your business profile stays up-to-date, you’ll have to confirm your public records by filing an annual report with your state department. Some states require it on an annual basis while others call for biennial reports.
LLC “Good Standing”: Why You Need It
For an LLC to be in good standing with the state means to keep up with all compulsory compliance requirements and catch up with filing dates. Should you miss any deadline or fail to meet taxation or licensing requirements, you’ll put your business at risk. Not only could you end up with severe fines and penalties but also it can put your corporate veil protections at stake. There is even the risk of administrative dissolution if you don’t handle those issues. On top of that, there are a few more practical reasons why your LLC needs a “good standing” status:
- To raise financing, it’s important to avoid situations when you have any problems with your LLC status. Whether you are going to take a loan from the bank, contact any financial institution for a crediting program, or decide to attract investors, good standing with the state is a must;
- Planning to expand your business to another state by filing for a foreign qualification there? Get ready to have your LLC status monitored and verified in your home state;
- If you need to register a DBA name or start a trademarking process, appropriate LLC status is also crucial here. The same is true when applying for business licenses and state permits;
- Should any of your vendors, suppliers, traders, or customers want to find out more about your company, any violations of state requirements might look off-putting to them;
- Finally, if some of the LLC members are going to sell their equity share or you think about selling your whole business, be sure potential buyers will first check your “good standing” status.
To continue, some states even require that you issue a certificate of good standing on a regular basis to prove your due LLC status to be able to do business in this state. The document confirms that your business is valid, legitimate, and approved by the state. A certificate of good standing is issued by a state department or authority that varies by state. Normally, it’s a commission or agency controlling tax aspects and financial reporting. Notably, the document has an expiration date and will need renewal. Usually, it either covers a calendar year or is valid till you file the next annual report. Yet, there are situations when you’ll be required to have a certificate no older than 90 days, for example, while applying for a foreign qualification.
If your LLC’s good standing status was discredited for some reason, you need to regain it as soon as possible to avoid any negative consequences for your business. For that, you’ll have to eliminate the causes that put your company status at risk. Commonly, these are overdue tax payments or missed filing and reporting dates. In this case, most states require some statement from LLCs outlining the plan of settling the problems impacting your LLC’s good standing.
How to Check an LLC Status: Steps to Take
The easiest and fastest method to check the current status of your LLC is to do a name search. The search tool is available via the Secretary of State’s website, and the results will display your company legal name and status, approved, lost, or dissolved.
To get a certificate of good standing for your LLC, you’ll need to visit the website of your state department and find the status certificate link there. Most often than not, you’ll spot it on the business registration page. The application form contains common business info such as your contact data, LLC name, your company’s filing number, and the type of business entity you run. This service is payable, and the fee for LLCs is $45. You can choose to receive your certificate either in electronic or in paper form.
To verify an LLC status, when you are targeting long-term relations with the company to be sure you’ll get a reliable partner, you can also use the Better Business Bureau search. This way, you’ll not only check the business rating but also will be able to figure out the LLC address and name of the company’s managers and owners.