Congratulations! You formed a company! After all the paperwork and filings, your business has been established. Is all the paperwork over? Not quite yet…Maintaining your company’s records is just as important as making sure it is organized properly. Here are a few key points to ensure your business is protected.
File Your Annual Reports
Arizona Corporations are required to file an annual report. Filing your annual reports is relatively quick and easy, especially now that you can file annual reports online. There is a filing fee of $45 plus additional fees to expedite the filing. If the annual report is not timely filed, late filing and reinstatement fees will be assessed. Why is it so important to file an annual report on time? Not only are the annual report filing fees a revenue generator for the state, but they are also a legal requirement for any Arizona company.
To the Arizona Corporation Commission, failing to file your annual report means that your company is no longer active and is not in good standing. If you do not file your annual reports for several years, your company will dissolve involuntarily. Could this have a serious effect on your company? Absolutely. If your company is not in good standing, you are not active according to the state. As a result, your company can lose its legal protection. Let’s say you enter into a contract with another vendor and the vendor wants to renege on the contract. If you are not in good standing, the vendor can very easily void the contract since your business is legally unable to sign the contract. It could get worse. Let’s say an unsatisfied customer decides to sue your company for damages. If your company was not in good standing when the transaction occurred, then the action cannot be filed against the company, but instead may be filed against you, personally.
How can eeCPA help you?
We can assist you with Annual Report filings, updates & documentation of Annual Meetings, at our normal hourly billing rates.
Added Value: As an eeCPA client, you are welcome to the use of our conference room for free, at any time, should you wish to schedule a meeting of the directors of your business.
Make Sure Your Contact Information is Up to Date
If your address has changed, make sure you file a Statement of Change of Known Place of Business or Statutory Agent with the Arizona Corporation Commission. The Arizona Corporation Commission does not allow the Postal Service to forward mail. You do not want to miss any critical documents, so please be sure you notify the AZ Corporation Commission of any changes.
Furthermore, if your statutory agent resigned, you must appoint a new agent immediately. Arizona law requires all entities to have a statutory agent. Failure to appoint a new statutory agent results in loss of good standing. You can file the same Statement of Change form to appoint a new statutory agent.
Finally, make sure your corporate life has not expired. If you chose a specific period of time for your corporation to exist and the lifespan concluded, you need to file an amendment to ensure your current life is valid.
eeCPA Client Bonus
We offer statutory agent services to our existing clients at no annual fee. Plus, as part of our ongoing service to our clients that use our statutory agent service (for free), we check your corporate record to be sure that your address and contact information is current. If it is not, then we update your information with the Arizona Corporation for a nominal fee.
Preparing Corporate Minutes
Arizona law requires all corporations to hold annual shareholder meetings and maintain corporate records in accordance with the company bylaws. Failing to adhere to these bylaws could result in troublesome legal issues down the road. As a result of poor recordkeeping, creditors could pierce the corporate veil and make you personally liable for your corporation’s debts.
In addition to protecting the shareholder’s liability, keeping good minutes is vital to providing an audit trail for corporate decisions and transactions. If your company needs a legal opinion, the minutes are the best source for supporting evidence. Most importantly, your minute book documents the authority granted to directors and shareholders and preserves vital information regarding stock records and transfers if there are any future discrepancies.
Annual Budget
While you are updating your company records, this is the perfect opportunity to take a look at your budget. Creating a budget is an incredibly useful tool to help you make a prediction of expected revenues and expenses for the next year. You can project numerous situations for your business’s profitability to help plan for the upcoming year. You can also map out your cash flow to help identity any potential problems in the upcoming year. If you foresee a shortage on cash for a period, you can plan ahead to get a line of credit or borrow money, etc.
While recordkeeping might not be the most exciting aspect of operating your business, it will definitely save you in the long run. If you have any questions, feel free to contact our office.