Author: Harbor Compliance
Every business has obligations to register and maintain good standing with their state, regardless of their industry. Registering with the secretary of state, opening payroll tax accounts, and maintaining business licenses are part of running a compliant business.
As they grow, many businesses struggle to navigate the different registration requirements in each state. They may lack the systems to keep up. As a result, many businesses are under-registered compared to where they need to be. This under-registration impacts their ability to hire, grow, and compete.
On the other hand, learning state requirements and taking a proactive approach to compliance is more efficient and profitable.
This article provides a high-level overview of state registration requirements and why it’s important every business understands them.
State Requirements 101
While every business faces a unique set of requirements, there are three core concepts that apply to all businesses.
Secretary of State Registration and Registered Agents
When you formed your business, you filed articles of incorporation or articles of organization with your secretary of state’s office. Businesses that begin operating outside their original state must register (aka foreign qualify) with each new state. This generally gives you the authority to transact business in that state, the right to use your business’s legal name, and the ability to bring and defend against lawsuits.
During secretary of state registration, your business must appoint a registered agent. The registered agent must have a physical address in that state to receive lawsuits and other government notices. Few businesses can meet this requirement in every state. And most business owners would prefer not to have their own address listed where lawsuits can be delivered.
Once registered with the secretary of state, businesses are required to file an annual report. Each state has a different deadline. And while most states require a yearly filing, some states require the filing every two years. Businesses must file these reports on time, not only to avoid late fees but also to stay in good standing and keep their right to do business intact.
Tax Registration
Businesses that sell, hire, or conduct other taxable activity must generally register with the state revenue authority. For example, every state has some form of payroll tax. These accounts are not opened automatically, yet your business needs an ID to onboard employees, pay them, and submit returns on time.
Tax registration must generally occur before the activity starts, in this example before the first hire in a state. In most states, the tax registration process is lengthy and complex. Critically, delays in registration (by the business or the revenue agency) can hold up the entire hiring process.
Business Licenses
A business license generally allows a company to operate in a particular location. It may also be industry- or product-specific. For example, a restaurant may have a general business license to operate in its city, plus food service and beverage licenses. A construction firm may have licenses for its trade in each state.
As a rule of thumb, a business needs a larger number of licenses as it adds locations and expands into new states. Licenses renew at different times. And, just like keeping up with secretary of state and payroll obligations, keeping licenses in good standing is essential to staying in operation.
The Best Way to Meet Requirements
Businesses need a system to access the requirements of each they operate and manage all their deadlines effectively. Many businesses try to do it alone, or worse, let their obligations take a back seat.
Our recommendation is not to go it alone because you simply don’t have to. Just like you entrust your payroll and HCM needs to Asure, there are experts and technology that streamline your business and protect your good standing.
Asure has teamed with Harbor Compliance to help your business register and maintain compliance with state requirements. The Harbor Compliance Platform enables you to manage all your secretary of state, tax, and licensing obligations in one software, plus professional services to register efficiently.
To learn more, visit https://landing.harborcompliance.com/partners-asure-software.