Is your business in good standing? Many business owners do not know the answer to this question. Business entitles are required to complete certain compliance activities that are a prerequisite for maintaining good business standing. The rules vary from state to state and from entity to entity. For example, in Mississippi an LLC must file a business privilege tax return and annual report with the Mississippi Department of Revenue and a corporation must file a schedule AL-CAR with a business privilege tax return. Sometimes accountants will make this filing on behalf of their clients.
Why is this important? Any entity status other than good standing indicates a compliance problem. Unfortunately, a Notice of Noncompliance is often discovered at very inopportune times, such as in the middle of a merger or acquisition. This reveals to the other party to the transaction that the company owner may be disorganized and they may infer that they did not dot their I’s or cross their T’s in other areas as well. My recommendation is to keep up with business entity compliance requirements, monitor your various entities and keep filings on your calendar.
Has this been done for your corporation or LLC lately? If you are unsure, I am happy to check on your behalf or to send you a link to where you can check on your own.