When working with my clients, very often I found that their legal entities are “past due”, meaning that they are not in good standing with the state. This may create an impediment for the owner if they are looking to sell their practice, looking to purchase a practice or even onboarding a new partner to their practice. Without having a legal entity in good standing with the state could hinder these transactions.
Why Legal Entities Must Stay Current
In New York State, all legal entities must maintain their active status to fully benefit from the protections they provide. Whether you operate as a Professional Limited Liability Company (PLLC),a Limited Liability Company (LLC or a Professional Services Corporation (PC) certain filings and fees are necessary to stay compliant.
- For PLLCs and LLCs: A biennial statement must be filed with New York State every two years. The cost is $9 and can be completed online. The filing ensures that the New York Secretary of State has up-to-date information, including:
-
- Officer Details
- Address for service of process
- Other relevant business information
- For PCs: A triennial statement must be mailed every three years, costing $105 to the New York State Department of Education to update the department of any changes to the PC. Like the LLC/PLLC above, this filing serves a similar purpose, requiring:
- Names and residence addresses of shareholders, officers, and directors
- Certification that all individuals are authorized to practice the licensed profession
These filings are critical to confirming the legal entity’s existence, ownership, and compliance with state regulations.
Key Details to Remember
- Updating Addresses: Many business owners use outdated addresses when forming their entities. Some even use a home address that existed at the time of filing, but may not be a valid address 2 or 3 years after forming their business. While others may use a virtual address, especially if they are providing solely telehealth services. If your business address changes, you should update it immediately to ensure you receive important notices and documents, which, if missed, may incur fees and/or penalties.
- Differences Between PLLCs/LLCs and PCs:
- PLLCs and LLCs can file online for a nominal fee, making it a quick and simple process.
- PCs require mailing in the triennial statement to the New York State Department of Education. A notice should be received when the statement is due. If you haven’t received a notice, that may be an indication that your address is not own requirements. Be sure to check the specific rules in your state to remain compliant.
3. State Specific Rules: While this information pertains to New York, each state has its own requirements. Be sure to check the specific rules in your state to remain compliant.
Why Timely Filing Matters
Failure to file these statements and pay the required fees can result in losing the protections your legal entity offers. This could leave you exposed to liabilities and negate the benefits of forming the entity in the first place. If you are unsure of your filing obligations, consult your attorney, CPA, or financial advisor. They can guide you to ensure everything is handled correctly and on time.
Maintaining your legal entity’s active status is crucial to protecting your business. Whether you file every two years or three years, the process is straightforward and cost-effective compared to the potential risks of noncompliance. I want a space between these 2 lines and I can’t do it. I want a space between these 2 lines and I can’t do it with the formatting that was originally used. I’ll try. If possible, it will that coding has to be overridden and if there is not a tool, I won’t be able to do it. I will see what I can do I want a space between these 2 lines and I can’t do.
Recent Comments