Alerts

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 i nstructions. 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
Turnaround Time	Expedite Fee	Submission Cutoff*
24 Hour	$50-$100	6:45p EST**
Same Day	$100-$200	1:45p EST
2 Hour	$500	4:45p EST
1 Hour	$1,000	5:45p EST
30 Minutes***	$1,500	6:15p EST
* 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 orders@capitolservices.com 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.

Registered Series LLCs are Coming to Texas

The Texas legislature has followed the State of Delaware’s lead by providing for a new type of series LLC, a “registered series,” which is formed by filing a certificate of registration with the Texas Secretary of State.

Since 2009, Texas law has permitted the creation and use of series LLCs, a unique form of limited liability company in which the articles of formation allow for unlimited segregation of membership interests, assets, and operations into independent series. Until recently, however, LLCs in Texas did not have a mechanism to register their series with the Texas Secretary of State or to obtain a certificate of good standing (called a certificate of fact) from the Secretary of State for a series. This lack of transparency often caused consternation from third parties transacting with such series.

Effective (21)

Gray Area (4)

No Legislation (28)

In 2021, the Texas legislature passed Senate Bill 1523 to address this issue. The legislation, effective June 1, 2022, provides LLCs with the option of formally registering their series with the Texas Secretary of State through the filing of a certificate of registration. The existence of a registered series will be confirmable in the Secretary of State’s public records, and interested parties will be able to obtain a certificate of fact from the Secretary of State for each registered series. The legislature anticipates that this legislation will enhance the attractiveness and improve the functionality of series LLCs in Texas. The original type of series will remain available and has been renamed a “protected series.”

Readers will note that this legislation is very similar to legislation passed in Delaware in 2019, which allowed for the formation of registered series through a filing with the Delaware Secretary of State and acted as a model for the Texas bill.

Series LLCs are becoming an increasingly popular option for businesses as more and more states pass legislation authorizing their creation and use. Currently, around twenty states (plus Washington, D.C.) have adopted statutes permitting series LLCs.

What is behind this increase in popularity? Series LLCs offer a method of liability segregation without the cost and upkeep of forming multiple LLCs. Instead, they permit a single LLC to be formed with the designation that it will allow for series to be created within the limited liability company agreement. Thereafter, each individual series will operate like a separate entity with a unique name, bank account, and separate books and records. Each series within the LLC may enter into contracts, sue or be sued, and hold title to real and personal property, and the assets owned by each series are shielded from the risk of liability of the other series within the same series LLC.

Business Organizations Code Amendments

The Texas Legislature recently amended the Business Organizations Code to provide that acting as a governing person of a domestic or foreign entity that is registered to transact business in Texas is not an activity that constitutes transacting business in the state. A “governing person” is a person entitled to manage and direct the affairs of an entity and the governing documents of the entity. This change, effective September 1, 2021, is meant to address any contrary implication created by a 1983 Texas attorney general opinion. Another notable change to the Business Organizations Code is the requirement that certificates of formation include the initial mailing address of the filing entity. A “filing entity” is a domestic corporation, limited partnership, limited liability company, professional association, cooperative, or real estate investment trust. This change, effective January 1, 2022, was requested by the Texas Comptroller’s office to enhance its ability to communicate with new filing entities and assure franchise tax reporting compliance.

Let Our Client Dashboard Be Your Virtual Assistant

While working during the pandemic many people have continued to seek e-solutions that can better assist them as they are needing to work remotely. We’d like to remind you that access to tools like Corporate Entity Manager, UCC Filing Manager, Forms Library, bill pay, registered agent addresses in all 50 states, quick links to websites, and more are available to you 24/7 through your Client Dashboard at www.capitolservices.com.

Our UCC Filing Manager allows you to securely prepare, submit, and manage your UCC filings portfolio nationwide. This guided system takes the guess-work out of form preparation, prompting you to enter the required data based on the filing jurisdiction selected. When using UCC Filing Manager to prepare, transmit, and file your UCCs, your historical records and filing evidence are then stored for your easy access. You will receive notices of pending expiration for all UCC-1s submitted through Filing Manager. Our expiration notices allow for quick and easy preparation of continuation filings. Note that historical record data is also able to be uploaded, allowing UCC-1s filed outside of the UCC Filing Manager to receive the same notice of expiration e-benefits.
You’re also able to manage your registered agent services remotely. View the most up-to-date list of Capitol Services’ registered agent addresses nationwide, update client contact information, appoint new contacts, and request a change of agent, all at your convenience and on your timeline.

Our Corporate Entity Manager allows you to view, update, and manage corporate entity information and generate reports with the click of a button. This tool can be used to search for legal service of process records, tax notices, and annual report management filings. A spreadsheet of upcoming annual report due dates based on each jurisdiction’s corporate calendar is provided for each of your entities.

Placing your corporate and lien orders directly through your Client Dashboard allows the benefit of order tracking, order status updates, order history, and an archive of order evidence.

If you have questions regarding your online access feel free to reach out to us for a quick online demo or more information. We’re here to make your job easier.

GO TO MY DASHBOARD

Wrap Your Arms Around Compliance

Consequences of failing to file your annual reports can be significant.

Penalties include:
• Administrative dissolution or revocation
• Loss of right to use your corporate name
• Tax liens against you for unpaid taxes
• Voidable contracts if entered into while in bad standing
• Breach or default of duties under financing agreements

Keeping up with reporting requirements and due dates can be a headache. The task isn’t made any easier with so many states ceasing to send reminders of annual report due dates. Business owners are left to fend for themselves resulting in many companies falling out of good standing each year.

Don’t 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.