Corporate 
Compliance
- Hold initial and Annual Director and Shareholder Meetings
- Adopting and maintaining updated bylaws
- Issuing stock to shareholders, and recording all stock transfers
- Filing Annual Report (also called Annual Statement) to State Registrar
- Pay Franchise Tax/Annual Fees – some states have a franchise tax – a fee paid to the state for the privilege of operating as a corporation or LLC in that state. States employ different formulas, which may be based on business revenue or number of authorized shares and par value, for calculating this tax
- Finally, a few states also require initial reports/statements to be filed and fees to be paid within the months following incorporation
- If a corporation or LLC is sued and is unable to meet all corporate or LLC formalities and state requirements, a judge can rule that the company has been acting more like a sole proprietorship or general partnership. This can result in “piercing the corporate veil” meaning that limited liability protection disappears and leaves individual owner(s) assets vulnerable if a lawsuit judgment is made against the company. There are also consequences on the state level that can happen prior to piercing the corporate veil. If a corporation or LLC does not comply with a state’s annual or ongoing requirements, that company is no longer in “good standing”. Each state has different parameters for good standing, and many impose late fees and interest payments on outstanding annual statement and/or franchise tax fees. Being out of good standing long enough may lead to administrative dissolution, in which all benefits of being a corporation or LLC are lost