Inaction Results in Serious Consequences
Did you know that most states require companies to file an annual report with the Secretary of State in order to remain in good standing in the state? This report usually contains basic company information including management/officer data, address details, and registered agent information.
There can be serious consequences for missing a filing including:
1. Administrative dissolution or revocation;
2. Loss of the right to use your corporate name;
3. Tax liens against you for unpaid taxes;
4. Voidable contracts if entered into while in bad standing;
5. Breach or default of duties under financing agreements.
It can be challenging to monitor each state’s reporting requirements and to keep abreast of any changes. Complicating matters, many states have stopped sending annual report reminders to companies. Consequently, companies are left to figure out their reporting obligations on their own. Unsurprising, many thousands of companies across the country miss their annual report filings and fall out of good standing each year.
Do not put your business at risk! Sign up for our Annual Report Management Service (ARMS), and let us manage your filings! ARMS is an auxiliary service offered to companies that have appointed us as their registered agent. We can help take the pain out of annual report compliance.
Core Duties of a Registered Agent
Most companies understand that they are required to designate a registered agent on their application to do business in each state. But, are you familiar with the duties of a registered agent? State statutes set forth a registered agent’s core responsibilities. Generally, these responsibilities are to:
1. Maintain a physical address (a registered office) in the state;
2. Receive legal process, notices and demands on behalf of the represented company, and forward such documents to the company at the address most recently provided by the company;
3. Notify the company if the registered agent’s address changes or if the registered agent resigns.
A company’s registered agent is not statutorily responsible for submitting tax or annual report filings on the company’s behalf or paying any fees for the company. A registered agent is also not responsible for the forwarding of general mail. Many companies incorrectly use the registered agent/office address for their mailing address on registration forms. The mailing address should actually be an address for the company and not the registered agent.
2019 DELAYS ≠ 2022 DELAYS
COVID closures, logistical bottlenecks, and short-staffed filing offices continue to pose challenges for customers used to submitting and receiving filings on an expedited basis. Unfortunately, we’re seeing these significant delays in very high-volume jurisdictions further exacerbating the impact on closings. We mentioned Delaware delays in the last issue of our newsletter and we’re not seeing much of an improvement there. “Next Day” expedites are currently running about 3-5 days to receive filed evidence, but that is far superior to the 4-month turnaround for routine processing. Delaware, however, is not alone. UCC Filing acknowledgments in New York are a good 10-15 days out and copy requests can also run 2 weeks out. Unfortunately, there is no expedited service available there.
In California, most filings are taking anywhere from 1-4 weeks to finalize evidence and expedite is only available for online filings with additional fees upwards of $750. UCCs in the Golden State are taking their time as well — about a week. Even in Texas where, thankfully, we have seen some improvement, preclearances and mergers can still cause us to wait 3 weeks for evidence. We’ve said it before and we’ll say it again: Don’t miss your filing date. File early. There simply are no margins for error and unfortunately, though we’ve fielded so many of your pleas, there is very little we can do to get our contacts at the filing offices to prioritize, or even offer an estimate of completion for all of our many pending submissions. Don’t wait! Contact us now to get your filings on the fast(ish) track!
Five Fun Facts About Delaware
Delaware definitely likes to be first. It was the first state to ratify the Constitution, and it’s often the first choice for many business entity formations. Below are 5 possibly lesser-known facts about this “Small Wonder”:
- Delaware is home to more businesses than people.
- The Delaware Court of Chancery was established almost 230 years ago and has written most of the U.S. corporation case law.
- Approximately 340 of the Fortune 500 claim Delaware as their legal home.
- Delaware registers more businesses annually than any other state with nearly 250,000 new businesses registered in 2020.
- Our Delaware office is staffed from 8am – 7pm Eastern with industry veterans well-versed in the intricacies of any form of filing and not just in Delaware.
Capitol Services likes to be first, too. We’d love to be your go-to service provider when you need assistance with your Delaware registration and beyond!
These and other interesting facts about Delaware can be found at www.corp.delaware.gov.
Comptroller Switches to Electronic Notices
The Texas Comptroller has changed its annual franchise tax notification method. Historically the agency mailed the annual notice to the mailing address it had on file for the entity. This year, the Texas Comptroller is only mailing notices to first-year filers and those for which it does not have an email address. Do not forget to check your email, including your spam folder, for your franchise tax notice this year!
Annual franchise tax reports are due on May 16 this year. Even if you have no tax due or no activity to report, you are required by law to file a franchise tax report and information report every year. Online filing is easy with WebFile — you will need your Texas taxpayer number and WebFile number, both listed on your franchise tax report notice.
If you need assistance with your 2022 franchise tax report filing, the Texas Comptroller offers FAQs on reporting and filing franchise tax, as well as current year instructions. You can also receive assistance by calling 1-800-252-1381.
Utilize Expedite Options to Secure File Dates
You may have noticed increased messaging from Capitol Services related to delays in one of our busiest filing jurisdictions: Delaware. As circumstances change, so too do the specifics of processing turnaround. At the time of this post, routine processing of Delaware filings is over a month behind. Further, if a filing is in process, you cannot obtain good standings or filed documents because the entity’s filing history and status is incomplete during this pending period.
Expedited processing is a “must” if you have an upcoming closing or a required filing date. Avoid unexpected delays and choose a level of expedited processing that will best fit your needs:
|DELAWARE EXPEDITE OPTIONS
* Submission Cutoff Time refers to time submitted to Capitol Services.
|** 24 Hour Expedited Filings submitted after 6:45pm EST can still be processed until 8:30pm EST if they are submitted directly through the [email protected] email address.
|*** The state will not guarantee 30 minute processing, rather, they will guarantee that all 30 minute processing requests will move ahead of other service requests in the queue. If the 30 minute timeline is not met, the price will be adjusted to match the expedited time level they were able to accommodate.
It’s important to note that while Delaware has stopped offering preclearance checks, they do still allow a 5 business day grace period wherein you can make corrections to rejected documents and still maintain your original date of submission. As with so many things in recent months and years, news and events are changing rapidly. Be sure to ask your customer service representative about the latest delays and turnaround for expedited processing.