Starting a business has the potential for a significant return on investment. When you invest your life’s work into forming a new entity, a wisely selected business structure can mitigate risk.
A limited liability company (LLC) separates personal assets from those of the business, protecting your individual financial situation during litigation. However, failure to maintain good standing with the California Secretary of State (SOS) could affect your rights.
Answers to three common questions about Statement of Information requirements
You must file a Statement of Information within 90 days of approval of your Articles of Organization, and every two years thereafter. Providing current information about your company is necessary to maintain your legal protections.
General knowledge of the legal filing requirements can help you proceed with business as usual. Some of the common questions surrounding the necessity of subsequent filings and potential penalties include:
- What should I list for my principal address? For an in-state, domestic LLC, use your designated office address, as listed in your Articles of Organization. With LLCs formed elsewhere and registered to do business in California, you may enter the address used in your initial filing.
- How should I explain my business? LLCs typically allow great flexibility in business activities, so you’re not limited to conducting one type of business. Still, you must state a specific purpose for your business formation. For example: “Exporting of American-made goods to retailers based in Southeast Asia.”
- What happens if I don’t file a Statement of Information on time? The SOS may assess a $250 penalty if you don’t file within 60 days of your due date. Failing to submit the required documentation could suspend your legal right to conduct business in California.
Paperwork may not be the first thing on your mind while focusing on the daily operations necessary to scale your company. However, sometimes it’s imperative for your business’s future.