As a small business owner, there are lot of plates that you are constantly spinning. How are your customers? Employees? What’s going on with your vendors? Your distributors? And on and on. One thing that often slips through is the actual status of the company. We had an intern this summer, and one of her jobs was to look through a bunch of our clients (not all – we aren’t that mean) and check on their status with either Wisconsin’s Department of Financial Institutions or their state’s Secretary of State. More than a few were behind on filing their Annual Reports – some to the point of either being in danger or actually having been administratively dissolved. Ruh-roh.
So what does that mean? First, companies register with states to let them know “Hey, I’m doing business, and I want to limit my personal liability. If something goes wrong with the company, the company’s assets are on the line, not my personal ones. Here’s some information and some money.” Then most states aren’t happy with just a one-time only message. They want the company to check in (usually every year) to say “Yup, still going. Still limiting my liability. Here’s some information and some money.” The information they have requested has increased a bit as states are trying to crack down on shell companies (see also BOI reporting). That means companies have to keep that reporting on their radars. A good way to do that is to create a notification for your company’s creation date. Have some cake and file a report (or confirm the report has been filed). It’s also a good time to think about your operating agreement or bylaws and any boards of directors, but don’t let that overwhelm you. That’s icing on the cake.
If it’s time for the company to go softly into that dark night, don’t just drop and run. Dissolve it. That also helps limit your liability. That includes some resolutions showing the plan for dissolution (e.g. who gets any assets, how is stuff getting paid off, etc.), Articles of Dissolution, and usually notices to any potential debtors. It gets it done and over with – No more Ovsiankina effect and the Zeigarnik effect – and limits your exposure.
So help your company keep on keeping on or let it finally go. Go on, put that calendar notice on right now. Future you will thank you (as will our future interns).