2021 has just started and yet a lot of new policies and changes have already been launched to aid fellow business owners from the ongoing crisis. With tax season approaching, it is more important than ever to maintain a good standing for your business. Keeping compliance not only helps protect you from fines and lawsuits, but may help you fulfill requirements for programs you intend to apply this year.
To help you out with your 2021 business compliance situation, we are laying out 5 key compliance you need to take note:
1. Maintain proper corporate records
With tax season coming up, many businesses will come scrabbling down to get their records in order and maintain compliance. The thing is, having your paperworks in good order should be a critical business practice all year round. This will not only take a lot of your stress away, but will also provide you with critical business insights.
If you need help to maintain proper corporate records, talk to a compliance expert and outline your process fast.
2. Report key business changes to the state(s) where you are registered
Most states require LLCs or corporations to officially inform the state any important changes to their company. This usually comes in the form of a document called “Articles of Amendment”. You might need to submit this if you made changes in:
- Company name
- Business address
- Board of directors
- Business purpose
Check your state’s Secretary of State office or consult with your adviser if you made changes to your company, and are unclear of whether you should inform the state.
3. Hold an annual meeting
Depending on what business structure you have and the state where your business is registered, you may be required to hold an annual meeting and record your minutes. Generally, businesses structured as Limited Liability Company (LLC) or Corporation may need to fulfill this compliance every year. The meeting minutes serve as an official account of what the owners who attended talked about and decided for the company.
4. Submit your annual report
LLCs and corporations are generally required to file an annual report every year or every other year. It is important to do research about the due date, or to ask assistance from a compliance expert, as some states have different timelines. For instance, report filling might be due: every end of the calendar year; your company’s annual tax statement due date; or the company’s incorporation date.
Failure to submit your annual report might result in penalties, fines and other headaches you could’ve easily prevented if you filed it earlier on.
5. Prepare 1099s if you hired independent contractors last year
Starting with Tax Year 2020, a new form is required to report the payments used for the independent contractors (nonemployees) you hired for your business. 1 Form 1099-NEC is the new form for or nonemployee compensation (NEC) of $600 or more to a payee. This document should be filed with the IRS, electronically or on paper, and submitted to the recipients by February 1, 2021.
Along with this change, the IRS also revised Form 1099-MISC (Miscellaneous Income) for the 2020 tax year. Businesses only have until February 1 to send the recipient a copy of the form and must file it with the IRS by March 1 (March 31 if filing electronically).
If you are confused with the changes and require assistance with any of the compliance requirements above, you may book a consultation with us at https://calendly.com/levine-and-associates or send us an email at josh@levineandassoc.com.