This morning, I spent some time going through and sorting a stack of papers that had been building up near my desk and that made me think about housekeeping – corporate housekeeping. Often, businesses are started casually, with one or only a few practitioners, who are eager to “get under way.” When the business grows and someone is hired to manage compliance issues, it is infrequent that historic documentation is checked and verified. As a result, business compliance formalities, which can be quite time-consuming for licensed professionals, may be approached haphazardly or ignored altogether until, of course, a problem arises. So here I present to you a checklist and a challenge – do you have all of these documents on hand?
Every business entity must be actively registered in the state in which it is domiciled. In addition to the initial filings, many states have ongoing filing requirements; if such filings are not made, a state may deactivate an entity. In addition to its home state, a business must register in those other states in which it does business; exactly when “foreign” registration is required is dependent on the type and level of activity occurring in the foreign jurisdiction and you may need an accountant or attorney to make that call.
Design professionals must pay particular attention to and demonstrate compliance with the licensing requirements, for both the entity and individuals, of the home state as well as any state in which a project is located. Like state registration, licensing requirements vary from state to state; some states require that the entity be licensed in advance of soliciting work within the state. Both the state and the licensing body may also require notification when certain changes, such as a change of address or a change of ownership or responsible professional, occur.
Confirm that the entity management agreement, such as the LLC Operating Agreement, the Partnership Agreement or the Shareholders Agreement, is on hand and fully executed, both by the initial owners as well as anyone who received an ownership interest after the business was established. Were any amendments to the original agreements, or other governing documents such as corporate by-laws, completed and adopted?
Were stock certificates or other evidence of ownership duly issued? Can all current owners produce those certificates? If any prior ownership interests were terminated, was evidence of ownership retrieved and cancelled?
MWBE status may be established at both the state and federal levels. MWBE requirements vary from jurisdiction to jurisdiction and most require recertification or proof of compliance from time to time.
Some entities are required to hold annual meetings, elect directors, appoint officers, etc. as a matter of law or by contract. Are there written records of such annual or other meetings? In addition to the historical benefits of such recordkeeping, an inability to produce these records can be a primary factor in “piercing the corporate veil,” i.e., charging the business owners with personal liability.
Is your “house” in order? I would be interested to hear what you find.
Design professionals are responsible for the life, safety and welfare of people who use buildings, people who drive on roads and bridges, people who take public transportation and people who use parks.
The United States Department of Labor (DOL) has updated the overtime regulations of the Fair Labor Standards Act (FLSA),[^i] effective as of December 1, 2016.
LicenseSure works with BELS on behalf of its design professional clients and would like to share some recent lessons learned.
How to Convert an Existing New York Professional Corporation into a Design Professional Service Corporation
Contact the NYS Department of Taxation and Finance to obtain a Corporate Tax Search for the PC (takes about 7-10 days)
Design professional firms must comply with the business and licensing requirements of every state in which they do business. Nothing is ever easy so (of course) these requirements vary from state to state.
Heads up, New York! There’s a new profession in town.
Hurricane season 2017 has resulted in the devastation of numerous areas throughout the United States and engineers will be needed to assess the damage, clean up and rebuild for years to come.
A paltry $9 could be standing between your business and good standing.