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Corporation/LLC State Registration Scams

Now that taxes have been wrapped up, the next deadline for many small businesses and real estate investors may be your state’s annual report on your corporation or LLC.  Some states don’t require annual reports, but many do.  For example, Florida’s annual report for corporations, LLCs, limited partnerships, and similar entities is due May 1st.

Florida has a $400 late filing penalty, so get your report in on time.  You’ll get a notice if your state requires an annual report.  Most states (AZ is one exception) have an annual “franchise” fee for maintaining an entity in the state.  For example, two extremes are Utah’s fee at $20 and California’s at over $800.  State fees generally fall somewhere in between these two extremes.   New York has a progressive fee structure based on how big your company is.  One way or another, the states get their pound of flesh out of companies doing business in their state.

There are a number of scam groups that send out notices on the internet or by mail that request the fees be paid.  The scams look like they are coming from the state, but when you send your money as directed, the money doesn’t go to the state.  Your money goes to their black hole and is gone.  The scams use really high quality paper, have addresses in the state capital, and do a good job of looking official. 

A couple of the scams request money for a “certificate of status.”  There are a number of reasons you may have to have a certificate of status or a “certificate of good standing” showing that you are all up to snuff with the state (you have filed your reports, paid your fees, and done everything else the state requires).  The scammers will tell you to send money for your certificate of status.  The address looks good, everything looks to be from the state, but it’s not the state, it’s a scam.

Yet another scam notifies you that you have to submit your corporate minutes and file them with the state – for a fee, of course.  No state requires you to file minutes.  Your corporate minutes are private information.  They might be used in court to prove that you have a legitimate company, but if you have to produce them, you’ll be ordered by the judge in a court room. 

I just wanted to make you aware that the scams are out there and make sure you keep track of your state’s deadlines for your corporation, LLC, limited partnership, or other entities.  If you don’t comply with what the state wants, you lose your “good standing” with the state, and they revoke your company at the state level.  That means you have lost your asset protection value of that entity.

We talk about “corporate formalities” necessary to keep your corporate shield in place and strong.  In fact, I give a whole presentation on the formalities in my boot camp.  Keeping your state happy is the granddaddy of all corporate formalities.  If the state is not happy, your company is legally gone.  Don’t mess it up.

7 Comments
  1. Can you help me with Operations agreement and California reporting on a two member (husband and wife) LLC

  2. Yes, I’ve received these notices for our Alaska corporation. Great information!

  3. I’m in Texas can you tell me what the dead line is for this document, and how to go about getting it.
    Thanks so much
    Brandon Ford

  4. Brandon,
    There is an annual franchise tax report for an LLC in Texas due on May 15th.

  5. Great information…thank you.

  6. My LLC partner, were 50% owners, has never let me know how much money our company has made since 2015 thru 2018. I never recieved any documentation like a K-1 etc. He does not share the books with me. What do I need to do to get my taxes straightened out? I know profits have been made and half of that is mine. I invested over 100k in the business, he stole everything plus the taxes, I’m very worried about my tax situation. I’ve been in touch with the IRS the attorney general and no help. Had a tax firm just wanted more and more money. I sued my partner, my lawyer was incompetent. Basically caused me to lose the case. I’m just reaching out for advice or direction. Thanks for your time.
    Brandon

  7. Brandon,
    Contact the state and make sure your name isn’t associated with the LLC. I assume you want out. Write a registered letter making a demand for your tax information and your share of the profit/loss. Demand that your interest in the LLC be bought out for a dollar, and cut your losses. This advice is worth what you paid for it—nothing.

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