Keeping an LLC in good standing
LLC compliance, one item at a time
Forming an LLC is a single filing. Keeping it in good standing is a short list of duties that come round again: reports to the state, an agent who can be reached, records kept in order and licences that stay current. This guide takes them in turn.
Articles on each item are on the way.
What good standing asks of an LLC
The duties that come round again
Good standing is the state's way of saying a company is up to date with it. Most of what keeps an LLC there is routine, and most of the trouble comes from a routine item that nobody owned.
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Reports to the state
Many states ask an LLC to confirm its details on a regular cycle. What the report asks for and how often it falls due depends on where the company was formed.
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A registered agent
Someone with an address in the state who accepts legal papers on the company's behalf, during business hours, and passes them on without delay.
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Records in order
An operating agreement, the decisions members make and a clean line between company money and personal money. These are what an LLC leans on when its protection is questioned.
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Licences and permits
Local, state and trade licences each run on their own terms. A licence that lapses can stop a business trading even while the LLC itself is current.
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Tax filings
An LLC's tax position follows how it is classified, and some states add a separate tax or report of their own on top of the federal return.
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Changes on file
A new address, a member who leaves or a new manager usually has to be reported, and the public record stays wrong until it is.
The easily missed
Where a quiet year turns into a lapse
Nothing arrives to say an item was missed. The first sign is often a status that has quietly changed.
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Notices sent to an old address
State reminders go to the address on file. When that address is stale, the reminder never reaches anyone who can act on it.
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A company registered in a second state
Doing business elsewhere can mean a second set of filings, with its own calendar, alongside the home state's.
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An LLC that is not trading
A dormant company still exists on the state's books, and its filings carry on until it is formally closed.
Contents
What keeping an LLC current covers
- Annual reports
- who files, and what the state asks
- Registered agents
- the duty and who can hold it
- Good standing
- what it means and how to confirm it
- Operating agreements
- keeping the paperwork current
- Licences and permits
- local, state and trade
- Reinstatement
- when an LLC has fallen behind
- Foreign registration
- working in a second state
- Closing an LLC
- ending the filings properly
Where to begin
Start from where the company stands
The same list reads differently depending on how long the LLC has existed and whether anything has already slipped.
Newly formed
Find out what the formation state expects after the first filing, and decide who will own each recurring item before it falls due.
A few years in
Check the details the state holds against the company as it is now. Addresses, members and agents drift faster than people expect.
Already behind
Confirm the company's current status with the state first. What it takes to put things right depends on what that record says.