CORPORATE TRANSACTIONS & COMPLIANCE BLOG

5 Reasons End-of-Year Corporate Filings Are Like Holiday Shopping

By: Teri Mayor, COGENCY GLOBAL INC. on Thu, Dec 20, 2018

Holiday Shopping and Corporate Filing Have a Lot in CommonDecember is well underway, as is the hustle and bustle of holiday shopping... as well as the hustle and bustle of ensuring corporations, limited liability companies and other registered entities are properly formed, amended, dissolved or merged before the calendar turns over to the new year.

If you think about it, the practices that serve you well in buying presents for all the important folks in your life can also help make for a more stress-free year end when it comes to filing deadlines.

No, really! Hear me out.

# 1: Firm Deadlines 

Whether it is Christmas, Hanukkah or Kwanzaa, holidays have a very specific deadline by which point the shopping needs to be done…as do end-of-the-year corporate filings! Unfortunately, government offices are generally less accommodating than retail stores and will not usually work late hours or weekends just to help you meet year-end deadlines.

To help you avoid unpleasant surprises, we update our state and international holiday closings list as we receive notice of jurisdiction schedule changes.

# 2: Advanced Planning = Less Stress

Not that presents should be purchased and wrapped by Halloween but preparing a list before hitting the web or the mall will make for a more enjoyable and productive holiday gift-giving experience.

The same is true for corporate filings. The earlier you begin to prepare for the end-of-the-year crunch, especially when you need consent from another agency before you can file, the better off you will be. Let’s look at what might be required in a few key states:

  • Delaware has very few requirements for outside agency approval. A corporation or LLC filing a Certificate of Dissolution or a Certificate of Merger where it is the non-survivor should plan on making sure the current year’s taxes are paid to the state at least 48 hours in advance, but no formal clearance is required. When forming, only the use of the word ‘bank’ requires outside agency approval. Banking approval usually takes two to three days.
  • Illinois, like Delaware, does not require clearance from the Department of Revenue when filing a dissolution or withdrawal. Note that there are several words (‘insurance’, ‘indemnity’, ‘bank’, among others) that will require approval from either the insurance or banking department, which can take two to four weeks.
  • California also does not require tax clearance in order to dissolve or withdraw, but the entity must ensure it is in good standing with both the Franchise Tax Board and the Secretary of State. It is best to verify this as soon as possible as restoring an entity to good standing with the Franchise Tax Board can often take several weeks. California requires approval for certain restricted words such as ‘bank’ or ‘trust’.
  • In New York, tax clearance is required to file a dissolution or withdrawal for corporations. Depending on the situation, it can take anywhere from a few weeks to several months, so the best advice is to begin the process as soon as possible. Additionally, New York State requires outside agency approval for a great many words and purposes. Since time frames for these approvals tend to slow down at the end of the year, it is best to allow two to five weeks, depending on the agency.

# 3: Procrastination Gets Expensive

With holiday shopping, waiting until the last minute can often mean you’ll need to pay exorbitant shipping fees to make sure your gift arrives in time. In the corporate filing world, expedite fees play the same role. The longer you wait to file a document, the higher the fee you will pay. Make sure you are aware of the time frames and fees in advance so that you can ensure your important document is filed on time.

  • Delaware: Options range from routine, which is currently taking a month or more, to 30-minute service, which costs an additional $1,500.
  • Illinois: Illinois offers 24-hour expedited service for an additional fee, which can range from $25 to $200, depending on the type of entity and the type of request.
  • California: California offers 24-hour ($350), same day ($750) and 4-hour ($500) expedited service. To be eligible for 4-hour service, the document must first be pre-cleared for an additional fee. Standard turnaround time in California is about 4-6 days.
  • New York: New York has three levels of expedited service: 24-hour ($25), same day ($75) and 2-hour ($150).

# 4: Last Minute Rush Can Cause Rejection

Defective Corporate ActsA gift giver’s hasty, last-minute decision might lead to you standing in a line for returns, wondering what in the heck they were thinking. Similarly, it’s easy to make mistakes when rushing with corporate filings, which can lead to rejection of your filings.

Rejected documents can sometimes lose the initial submission date and cause you to miss your filing deadline, especially when they are not corrected and re-submitted in a timely fashion. If your filing is rejected in California or Delaware, you have 72 hours to resubmit the corrected filing and still maintain the initial submission date as the file date. In Illinois, you have only 24 hours. In New York, the file date is the date the document is approved by the state, rather than the date first submitted, so the file date cannot be guaranteed.

#5: Knowledge is Power

It’s always a lot easier to shop for someone who has given you a list of what they want. Knowledge is power, as they say! The same is true for corporate filings.

By using the pre-clearance process, you can know in advance whether the state will accept your important filing, removing a lot of stress from the process however, advanced planning is required. While Delaware and Illinois will pre-clear on an expedited basis, New York will not (and the process can take two to four weeks in December). Even with delays and the fees charged for this service, if there are doubts about the acceptability of the filing and a crucial need to get it filed on a certain date, pre-clearing a document can be worth it.

The month of December can often be a crazy time of strict deadlines coinciding with government office holiday closings, a higher volume of documents that need to be filed and, of course, our own desire to both take care of holiday tasks like shopping and decorating and spend some time enjoying the season. Planning out your corporate filings and taking advantage of services such as expedited processing and pre-clearance, can help you reserve time for holiday cheer.

 

This article is provided for informational purposes only and should not be considered, or relied upon, as legal advice.

Topics: Company Formation and Filing Considerations, Delaware Corporate, UCC and Compliance