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The Lies My Resignation Told Me About My Company

companyHow much do you know about your company’s story? Just like a great novel, your company’s narrative has a beginning, middle, and end. Often times, companies forget that their story has to end.

Every so often, conflicts such as financial tolls, familial hardships, and legal issues cause company owners to close the book on their saga without taking the necessary steps to finish the story. This preemptive move results in uninformed or misinformed decisions that hinder the company’s legacy. Just like a book, if a company opens, it also needs to close. Even though there are two ways of “closing” a company, only one way is truly beneficial for the entity.

Advisors sometimes direct their clients to have the registered agent complete a resignation of registered agent. In simple terms, a resignation is the removal of the registered agent’s name/liability from the company. What is often not effectively communicated is resigning from the entity does not automatically shut the company down.

In fact, the subsequent actions that follow are: a 30-day waiting period allowing the company to name an agent and continue legally conducting business, falling into “bad standing” or “inactive” status, and finally rendering the company legally unable to conduct business. However, because the entity was not formally shutdown via a cancellation, dissolution, or withdrawal document, some states are able to tax the company for up to three years.

In some states, an entity in an administratively inactive status can present problems when attempting to start a new business, qualify in other states, etc. An administratively inactive status is a forced state status in which a company has not formally shut down and has not submitted proper annual documentation to keep the entity active. This status renders the company unable to legally conduct business and, in some instances, relinquishes the ability to move forward with the submission of other legal documentation until the status is rectified either by paying back taxes and or fees, filing past due annual reports, closing documents, etc. which can become quite costly.Resignation

The best way to ensure your entity is formally shut down, is to file a cancellation, dissolution, or withdrawal in the respective jurisdiction(s). However, which document you must file depends on the state and entity type. For the best information, contact either your registered agent’s corporate division or visit the corresponding Secretary of State’s website.

Remember, in the end, a resignation only helps one party. Get informed and don’t forget to “close” the book on your entity.

The End.

Amanda Archambault, Registered Agent Associate

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Independent Manager Series – Part Two

I need an Independent Manager, now what?

Independent, ManagerIn the first part of the series I outline what the Independent Manager is, and what role they play with the LLC.  In this part of the series, I outline how a typical engagement proceeds.  Working with Incserv as an Independent Manager is easy.

      1.)  Initial Reach Out

Establishing an Independent Manager relationship is easy! – But it is an iterative process.  Before the engagement starts, we will need a copy of the Operating Agreement so we can learn what your needs and expectations are for the Independent Manager.  Clarifying questions or follow ups may fall out of this document.

      2.)  Complete an Engagement Contract

Once it is determined that we can assist with your needs, we will send an Engagement Contract.  This is a separate agreement that outlines each party’s role with respect to the relationship.

      3.)  Sign the Necessary Documentsindependent, Manager

Once the Engagement Contract and Operating Agreement are agreed upon, all parties sign the documents!  We will require a set of signed documents for our records, and we are complete.

We can move QUICKLY!  It is important to make us aware of any deadlines so we can make sure your expectations are met.  While engagements can usually be processed in hours, if the operating agreement is complex or if you need multiple managers, we may need additional time for document review.  It’s always best to reach out as soon as you are aware you will need a manager so we can begin the iterative process!

If you would like to learn more about the process, or are ready to hire an Independent Manager, you can reach out to us info@incserv.com.  We look forward to hearing from you!

Josh Twilley, President

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Independent Manager Series – Part One

Independent, ManagerIs an Independent Manager right for you?

With real estate markets heating up, there has been a growing number of requests for Independent Manager services.  This post outlines what this service is, and the next post in the series outlines how a typical Independent Manager engagement works.

An Independent Manager is one type of “Independent Representation” engagement that we offer – the others being Independent Director (in the case of a Corporate entity type), Springing Member (which is a dormant member/manager/director who is called into action if certain conditions are met), and Special Member (a broad term for an independent member whose role is defined in the operating agreement).  The Independent Manager refers specifically to a manager for an LLC.

What is an Independent Manager?

An Independent Manager is a manager of an LLC who is independent of the owner/operators of the LLC, and has no financial relationship with the LLC.  The operating agreement typically outlines the roles and responsibilities of the independent manager, which is usually very narrow in scope.  The independent manager is NOT an active manager of the entity, but generally sits in the background until needed.

Why would an entity require an Independent Manager?

The Independent Manager is generally a lender driven request – a bank or financier would require an Independent Manager to sit on the board and operate in the interest of the lender.  This interest is outlined in the operating agreement, but generally it is to prevent the LLC from going insolvent or declaring bankruptcy.  This is an added protection for the lender to make sure their investment is secure.

Are there other uses for an Independent Manager?

From time to time we receive requests for Independent Managers to be the sole manager of the entity – generally to keep the true owner hidden.  There are many risks associated with this type of engagement, and we will NOT contract for these purposes.

If you have any questions about the Independent Manager, feel free to email us at info@incserv.com!

Josh Twilley, President

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DE Foreign Corporations Annual Reports Due June 30th!

CorporationsAll foreign Corporations qualified in 2017 or before are required to file an annual report in Delaware on or before June 30th.  There are several ways to file:

  • Complete and send in the paper form that was sent to you by your registered agent of record.  Follow the instructions provided for returning the completed filing and payment.
  • Allow Incserv to file for you; send us your completed report and we will take care of having it filed with the state.
  • File online “here”.  Delaware is allowing foreign reports to be filed online.

Sign up for ARFS now to allow Incserv to keep you in good standing; let us do the remembering for you!

Karen Elliott, Assistant Vice President Client Development

 

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Don’t Forget! – Delaware June 1st deadline approaching

Delaware, Don't Forget!The Delaware 2017 Limited Liability Company, Limited Partnership and General Partnership taxes are due on or before June 1, 2018. For more information, click here.  The Delaware 1st quarter taxes for Corporations are also due on or before June 1, 2018.

Taxes can be paid by:

Logging into Snapshot™, click here.  (LLC, LP and GP taxes can be paid in SnapShot™; quarterly taxes cannot)

Calling Incserv to assist (800.346.4646)

Going directly to the state website.

Sign up for ARFS now to allow Incserv to keep you in good standing; let us do the remembering for you!

Karen Elliott, Assistant Vice President of Client Development

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The Pitfalls of Mergers

businessBoth sides are at the table, you’ve done your due diligence, the deal is made and the process begins!  You prepare documents for submission to the Secretary of State in the home state; receive evidence, the dust settles and what happens?  You begin receiving annual report notices for the non-surviving entity from the states in which the business is qualified!  Someone forgot about the states in which the business is qualified.  Here are some helpful tips in completing the due diligence process from a public records perspective.

Domestic and Foreign Jurisdictions

While the initial change should, in fact, happen in the home jurisdiction first, any change to its original authority application to do business should also be evidenced in the foreign jurisdictions.   Start with making a list of the entities and the respective jurisdictions in which each is registered. Keep in mind, each jurisdiction will have its own set of requirements.  For example, a state like Arizona will only require a certified copy of the merger from the home state.  However, Louisiana will need a certificate reciting the merger from the home state to effect the merger.

Handling Other Matters!

The process becomes a little more complicated if more actions have happened as a result of the merger.   Are there states where the survivor was not registered to do business but should be?  Many states will require a two-step process for recording the merger and then registering the new company by filing a new foreign registration application.  In Florida, the Department of State will require you to withdraw the non-survivor and register the survivor.  Did the entity merge with another entity and change its name and/or entity type within the merger?  Some states may require you to file additional amendment and/or conversion documents.

Avoiding the Risks

Until you have notified the foreign registered jurisdictions, most will continue to hold the entity liable for any annual requirements.  It’s important to check report due dates to ascertain when reports are due.   If evidence of the merger is filed before the report due date, the entity may avoid having to file reports and pay additional fees.  Unfortunately, if reports are due, you will most likely have to file any reports due and pay applicable fees.  There are also some states that will charge a penalty for notifying the Secretary of State of the merger after 60 days from the date of merger.

Knowing what each state requires is half of the battle; the other part is getting it done!  Let Incserv help you make the process a little easier!  You can click on the following link to complete the order form https://incserv.com/corporate-services/corporate-filings/?v=317b9cf9fc4d. Our experienced staff members can assist from beginning to end! As always, thanks for reading!

Deirdre Davis-Washington, Assistant Vice President

This blog is meant to be informative, but is not a complete list of due diligence requirements nor is it legal advice.  Please contact an Attorney for proper professional guidance.

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Appoint Incserv as Registered Agent – Consolidate Now!

Appoint Incserv as Registered Agent – Consolidate NowAre you receiving registered agent invoices from multiple vendors?  Are you tired of remembering which one represents which company or State?  If you answered yes to both questions, allow Incserv to help!

Incserv provides registered agent services on both a domestic and international level.  Incserv will manage the process of preparing the change of agent documents and will file them in the various states to be sure the registered agent is properly updated.  Once all of the changes are made, Incserv can sync your renewal cycle – this means each of your agent invoices will generate at the same time every year.  We will make the process as simple as possible.

Reach out to us today to get started – we are ready to make your job easier!  Click here to get started.

Karen Elliott, Assistant Vice President of Client Development

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Legislative Changes – March 2018

Incorporating Services, Ltd. (Incserv) is an active member of the National Public Records Research Association (NPRRA). One of the many benefits of this membership is the continuous flow of information from other members regarding changes in policy, law and processing of public records searching and filing across the US. We received the below information from the NPRRA.March

March 2018 Legislative Highlights

Idaho HB 379 was signed by the governor March 1, 2018, and relates to nonprofit corporations. The bill amends the nonprofit corporation law to require only one incorporator to sign the articles of incorporation upon formation. The bills become effective July 1, 2018. To view the entire bill: ID HB379

Indiana SB 180 was signed by the governor March 13, 2018, and relates to the Business Organization Code and Transactions Act. The bill changes the required information submitted in filings to the Secretary of State, qualification/registration of foreign entities, use of business entity names and administrative dissolution. A business entity can apply for reinstatement within 5 years after the date of dissolution or active status revocation. The bill is retroactively effective January 1, 2018. To view the entire bill: IN SB180

New Mexico SB 225 was signed by the governor March 1, 2018, and relates to the biennial report due date for corporations. Effective July 1, 2018, the biennial report for a corporation will be due the 15th day of the fourth month after the end of the corporation’s tax year. To view the entire bill: NM SB225

Tennessee SB 1942 was signed by the governor on March 16, 2018, and relates to partnerships filed pursuant to the Uniform Limited Partnership Act. The bill requires limited partnerships to be in good standing with the Department of Revenue, with all fees, taxes and penalties current, before certain filings can be executed. In addition, the bill requires additional information be provided for certain partnership filings. The bill became effective March 16, 2018. To view the entire bill: TN SB1942

Utah HB 186 was signed by the governor on March 19, 2018, and enacts the Benefit Limited Liability Company Act. The bill provides for the formation of a benefit company, addresses the termination of a benefit company, requires a benefit company to adopt a purpose of creating general public benefit, establishes standards of conduct, creates a right of action and requires a benefit company to prepare, distribute, and make public an annual benefit report. The bill becomes effective May 8, 2018. To view the entire bill: UT HB186

If you have questions or need assistance, feel free to contact us or call 800-346-4646.

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Maryland State Dept. of Assessment and Taxation Release Changes

Incorporating Services, Ltd. (Incserv) is an active member of the National Public Records Research Association (NPRRA). One of the many benefits of this membership is the continuous flow of information from other members regarding changes in policy, law and processing of public records searching and filing across the US. We received the below information from the NPRRA.

The Maryland State Department of Assessments and Taxation has issued a  about changes to its Annual Report and Personal Property Tax Return.  The press release states in part as follows:

“Beginning in 2018, the Department will be separating the Annual Report and Personal Property Tax Return filings, which historically have been combined in Form 1. All business entities will still be required to file a two-page Annual Report, and directions within that document will determine whether or not they must also attach a Personal Property Tax Return. The majority of business owners—roughly 200,000—do not actually own any personal property and will not be required to complete that section.”

A copy of the press release is attached, and also can be found online here: http://dat.maryland.gov/newsroom/Documents/2017.12.14%20Annual%20Report%20and%20Personal%20Property%20Tax%20Return%20Press%20Release.pdf

If you have questions or concerns, please contact our Washington, DC office at 202.386.7575, 877.531.1131 or dcorders@incserv.com.

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Delaware Annual Report & Franchise Tax – Help! Part Six

Today we close out our six-part Delaware Annual Report & Franchise Tax Series. If this happens to be the first blog you’re seeing in the series, click here to start from the beginning. We’ve covered the basics pertaining to filing a Delaware corporation annual report and paying Delaware franchise taxes. Now for a few of the “special case” scenarios…Delaware annual report

I understand the assumed par value method of Delaware franchise tax calculation, but what happens if a stock amendment was filed during the year? If an amendment changing your stock or par value was filed with the Delaware Division of Corporations during the year, issued shares and total gross assets within 30 days of the amendment must be given for each portion of the year during which each distinct authorized amount of capital stock or par value was in effect.  The tax is then prorated for each portion of the year dividing the number of days the stock/par value was in effect by 365 days (366 leap year), then multiplying this result by the tax calculated for that portion of the year.  The total tax for the year is the sum of all the prorated taxes for each portion of the year.

Is a Delaware corporation that is ending its existence or reinstating required to file an annual report or pay franchise taxes? Yes, when a Delaware corporation is ending their existence or reinstating to return the entity to good standing, the corporation is required by law to file an annual report and pay any and all franchise tax due. If you’re handling the process on your own, you will need to reach out to the Franchise Tax Section of the Delaware Division of Corporations prior to submitting your Renewal, Merger, Dissolution, Conversion or any other document filing that will end the existence or renew the status of your Delaware corporation in order to determine the final franchise tax fees and annual report filing requirements. If you’re working with a service provider, such as us, we can handle this part for you.

What happens if I miss the deadline for filing my corporation’s Delaware annual report and paying my Delaware franchise tax? A penalty fee will be added if the annual report is not filed by the due date. In addition, 1.5% interest is assessed and added to the total amount due. The 1.5% interest is calculated based only on the total franchise tax due and does not include the annual report fee and penalty. Interest is continually accrued on the 6th of each month until the franchise tax is paid or the entity goes into an inactive status.

What do I do if I made a mistake on my Delaware annual report filing? An amendment may be filed, but it must be filed before a subsequent report is filed. For example if you made a mistake on the 2016 report, the 2016 report must be amended before the 2017 report is filed. Otherwise the 2016 record will stand as is.

This wraps up our Delaware Annual Report & Franchise Tax Series. However, if you have any questions about or need assistance with filing a Delaware annual report or paying Delaware franchise tax, feel free to reach out to us. We’re here to help!