One Last Deadline!
- April 10th, 2014
Many of my clients who own businesses are focused on tax filings and deadlines in the spring and forget there is at least one more important non-tax legal deadline that needs to be addressed.
Every business entity in North Carolina is required to file an Annual Report with the Department of the Secretary of State. Annual Reports, along with a fee, are due on April 15th of each year. The failure of a business to timely file its Annual Report will lead to Administrative Dissolution of the entity. Following an Administrative Dissolution, a business is no longer empowered or authorized to conduct business except to the limited extent necessary to wind up its affairs and distribute the assets to creditors and owners. A business owner that continues the regular affairs of the business following an Administrative Dissolution likely does so without the limited liability protection afforded an entity in good standing. This places the owner’s personal assets within the reach of the business’s creditors. Additionally, an Administrative Dissolution is almost certainly a default under any debt covenants or valuable contracts a business may have which jeopardizes the operations of the business.
Many Certified Public Accountants file a business’s Annual Reports along with the business’s income tax compliance, however, this is not a universal practice, and every business should assure this has been filed for the current year, or is filed within sixty (60) days of the deadline to avoid the commencement of the Administrative Dissolution Process by the North Carolina Secretary of State.
One final note on Annual Reports – for my dental and other professional clients, a professional entity (PLLC, PA, PC) is not required to file Annual Reports. As such, you can disregard the foregoing discussion; however, be sure that the Registered Agent and Registered Address you named in your original Articles of Organization or Articles of Incorporation remain up to date. This is easy to forget since you do not annually revisit this information as part of the Annual Report process.
If would like to discuss your Annual Report, or if your business has been Administratively Dissolved and you would like to further discuss your options, please call me at (980) 228-9750 to schedule an appointment.