“Tomorrow is often the busiest day of the week.” - Tackling Year-End Corporate Compliance

“Tomorrow is often the busiest day of the week.” This African proverb suggests that people often delay tasks by convincing themselves that they will accomplish them in the future. The saying highlights the tendency to procrastinate, emphasizing how the promise of tomorrow can become a perpetual excuse for postponing actions. It serves as a reminder to address responsibilities promptly rather than continuously deferring them to an uncertain future.

As 2023 draws to a close, corporate leaders stand at a pivotal moment, recognizing the importance of meticulous year-end housekeeping and legal compliance actions that can pave the way for a smooth transition into the coming year. While some may consider this a wind-down period, this period demands a keen focus on adhering to regulations and refining organizational processes. In this blog post, we will delve into 10 matters corporations should be addressing to conclude the current year effectively and embark on a journey into 2024 that is both compliant and prosperous.

End-of-Year Corporate Compliance Checklist

1. Corporate Transparency Act (“CTA”): The biggest change for 2024 has to be the Corporate Transparency Act (“CTA”) which goes into effect January 1, 2024. CTA is intended to protect the United States financial system from being used for money laundering and other illicit activities. Does this affect my corporation? In one hundred words or less: With very few exemptions, nearly all domestic and foreign entities established or registered to engage in business with a secretary of state must submit reports to FinCEN. These reports must identify the “beneficial owner” and, for newly established or registered entities, every “company applicant” directly responsible for filing the document to form or register the entity for business or taking primary responsibility for directing or controlling such filing. Reporting requirements in 2024 and beyond include:

o Domestic reporting companies created before January 1, 2024 and foreign (non-US) reporting companies that first registered to do business in the US before January 1, 2024 have to file their initial beneficial ownership information ("BOI") report between January 1, 2024 and January 1, 2025.

o Domestic reporting companies created on or after January 1, 2024 and foreign (non-U.S.) reporting companies that first registered to do business in the U.S. on or after January 1, 2024, will have ninety (90) days after formation or registration to file their initial BOI report (temporary This is a temporary reporting rule for 2024. The reporting period will return to 30 days for companies filed on or after January 1, 2025.

2. Comprehensive Regulatory Compliance Check: With the regulatory landscape constantly evolving, it's paramount for corporations to conduct a comprehensive compliance check. Ensure that your organization is up-to-date with industry-specific regulations, tax codes, and any legal modifications that may have occurred throughout the year. This not only mitigates legal risks but also fosters a culture of ethical business practices. Focus on the following:

o Identify and compile a comprehensive list of applicable regulations and laws relevant to the industry and geographic locations in which the business operates.

o Evaluate existing policies and procedures to ensure they align with current regulatory requirements and identify gaps and inconsistencies in policies and recommend updates to ensure compliance.

o Review employee policies and documentation. Take stock of your internal policies and documentation related to employees to ensure compliance with labor laws and regulations. Any necessary updates or revisions should be implemented to reflect the current legal landscape, fostering a healthy and legally sound work environment. Now is the time to:

• Review and update Employee Handbook and policies

• Review and update employee agreements

3. Business License Check - Have you hired any new employees, in-house or remote? Are you doing business in other jurisdictions (states or foreign countries)? If you have, you may need to:

o review business licensing to ensure you have the proper licensing

o review insurance policies and limits to ensure compliance. Check for expired or outdated coverage. Review business insurance and employee health and benefit plans.

o if you are an employer subject to your locate state’s Unemployment Compensation Act, you must register with that state’s workforce commission

o check your renewals. Many licenses must be renewed annually. Plus, certain business activities may have triggered licensing changes. Review and renew Sales Tax Licenses, Business Licenses and Permits

4. Foreign Qualifications: Have you expanded the size of your business? Do you need to register in additional states? Are you conducting activities outside your state of formation that constitute “doing business’?

o You may be subject to a number of foreign qualification requirements. What constitutes “doing business” will vary by state statute. You might be required to register to do business with the state's corporation filing office, appoint a Registered Agent, and/or maintain a registered office in that state. Failure to qualify can lead to fines, loss of access to state courts, and other penalties.

5. Dissolutions/Withdrawals: Have you reduced the size of your business? Do you have any Dissolutions/Withdrawals that need to be filed by end of year?

o Steps must be taken to properly dissolve a business in the state of formation and withdraw from all states where it has registered. Doing so before year-end will eliminate the need to file a partial-year tax return for next year and may reduce other tax liabilities as well.

6. Annual Reporting Requirements:

o To remain in good standing, it's important to fulfill all annual report requirements. This includes filing annual reports and statements for businesses.

o Nearly every state requires corporations to hold an annual meeting or written consent in lieu of the same.

7. Intellectual Property Protection: The end of year is a good time to review your branding for updates and changes. Also, review the need for filings for protection, including:

o a state trademark with the secretary of state;

o a federal patent or trademark with the US Patent and Trademark Office; and/or

o a federal copyright with the US Copyright Office.

8. Data Protection Audits: Safeguarding Information Assets: In an era where data is a priceless asset, corporations must conduct thorough audits of their data protection protocols. Review and update privacy policies, security measures, and data handling procedures to align with the latest regulations. This not only protects your organization from potential legal repercussions but also strengthens customer trust and loyalty.

9. Financial Reporting and Audits: The end of the fiscal year calls for a meticulous review of financial reports and accounting practices. Corporations should conduct internal audits to ensure accuracy and compliance with accounting standards. Address any discrepancies promptly and transparently to maintain financial integrity and build trust with stakeholders.

10. Contracts and Agreements Renewal or Revision: Evaluate existing contracts and agreements to identify any that are due for renewal or revision. Ensure that all contractual obligations are met and that your organization is well-positioned for successful partnerships in the upcoming year. Proactive contract management reduces legal risks and establishes a foundation for transparent and mutually beneficial relationships.

I conclude with another proverb, “Procrastinating on corporate housekeeping is akin to stacking papers on a desk until it becomes an insurmountable mountain; tackle it incrementally to maintain order.” This proverb uses the image of a growing pile of papers to illustrate the consequences of procrastination in corporate housekeeping. It advises against letting tasks accumulate to the point of overwhelming chaos and suggests addressing them incrementally to maintain a well-organized and efficient corporate environment. Make room, 2024 is on the horizon. We are here to support you on that journey.