Upon the formation of a corporation or limited liability corporation (LLC), business owners and shareholders are required to comply with a number of state and federal regulations. These internal and external requirements should be documented, and records kept, in case an audit, business sale, or lawsuit should arise. Shigo Law Firm, P.A., helps our clients to remain compliant by providing the necessary business compliance counsel. Our law firm also defends clients who are facing penalties from the state and federal regulatory agencies.
Internal Business Compliance Requirements
Both S corporations and C corporations must adhere to strict internal compliance requirements. Shareholders and directors must attend annual meetings, bylaws must be updated and adopted, stock must be issued to shareholders, and stock transactions/transfers must be recorded. It is up to the owner, shareholders or directors of a corporation to discover the compliance requirements in Florida and to abide by them.
Limited Liability Corporations (LLCs)
LLC compliance requirements are not as strict as those for corporations, but it is in the best interest of business owners to follow similar guidelines and retain detailed records. LLC owners should update their operating agreement annually, issue and record membership shares and transfers, and attend annual meetings for managers, owners and directors. LLCs are popular because it provides protection against personal liability should a lawsuit occur, however, noncompliance revokes those protections, and small business owners can find out quickly its devastating effects.
External Business Compliance Requirements
External compliance requirements imposed by the State of Florida are the No. 1 concern of many owners of corporations and LLCs. If a corporation or LLC fails to comply with government requirements, including submitting an annual state filing and paying a fee, the State of Florida may levy hefty penalties, dissolve the company, or the company may have its good standing revoked. Owners may also see their protections revoked if they fail to follow procedures. For example, an owner can become personally liable, meaning his or her personal assets may no longer be protected during a lawsuit. This is known as “piercing the corporate veil,” and it can lead to damaging the reputation of your business as well as steep fines that could result in bankruptcy.
Understanding Your Responsibilities
Whether its disclosing financial records, changes in management, restructuring, or other seemingly internal actions, compliance requirements can have a devastating impact on your corporation or LLC. While there are business compliance agencies in existence that claim to be able to monitor and manage your compliance requirements, we advise caution. Know up front, in writing if possible, exactly what services these agencies offer, and what type of protection you receive should they falter in their services. Shigo Law Firm also recommends hiring an attorney to consult whenever a compliance question arises. We know how to keep your company in good standing with the State of Florida, and should your company falter, we're here to help you get back on track.
Shigo Law Firm is here to counsel you in ways to remain compliant at the onset of your corporation or LLC formation. Lynne and Thomas Shigo have the necessary knowledge to confidently defend clients against investigations and actions of enforcements.