How to Run a Compliant Business from Your Home Office

The COVID-19 pandemic has caused non-essential businesses across the country to adopt remote working arrangements. For many businesses and employees, work-from-home has already demonstrated to be safer and less costly. Despite the pervasive benefits, management faces unprecedented operational challenges. In particular, businesses must ensure they have the right systems and tools to stay compliant in a remote era.

The Basics of Legal Entity and Tax Compliance

In every state where your company does business, it must comply with the various entity, taxation, and licensing authorities. In general, this allows your company to continue doing business legally. As companies move operations from their traditional office space and into their employees’ homes, management should ensure the proper filings still take place, that employees understand their responsibilities, and that any gaps are identified and closed.

Ensure Company Registered Agents Can Receive Documents

In the remote paradigm, the first thing to do is check who your business’s registered agents are. The role of the registered agent is to receive legal notices, such as service of process, during regular business hours. Many times, business owners will list their company address in the state record. In normal circumstances, that may be a suitable arrangement. However, with so many companies working remotely, no one may actually be available! Because registered agents are appointed in each state, you will want to repeat the process anywhere your company has registered to do business.

Missed lawsuits and other deliveries can have adverse consequences. Thankfully, there is an easy fix. Business owners can file paperwork with the state to appoint a registered agent for their LLC or corporation that is available at all times.

Ensure Legal Entity and Tax Registrations are in Order

Unquestionably, the pandemic has transformed the concept of “where” we do business. With that flexibility, however, comes additional red tape. With employees, vendors, and customers working from home, companies have a larger footprint of where they do business. Every state requires companies that meet their statutory definition of “transacting business” to register with that state’s corporation authority (usually the secretary of state). While many states can and do assess penalties for late registration, there is usually a small grace period. Business owners should work with their legal counsel to identify and close any gaps by registering their company proactively.

For many companies, remote work has allowed them to recruit and hire top talent from all over the country. Business owners, especially those hiring out-of-state employees for the first time, should take care to register for the appropriate tax accounts, including employer withholding and unemployment. Many departments of revenue take several days or weeks to approve new business accounts. Plan ahead so that you can access that top talent and pay your new employees on time. If your business will become subject to sales tax or require any other licenses or permits to operate, be sure to do your homework and register proactively.

Managing Processes in the “New Normal”

With management and employees working in disparate locations, it is more important than ever to ensure internal compliance processes are followed. Many companies manage their state annual reports and other ongoing filings in house. Ensure that any employees responsible for submitting documents and reports to government agencies continue to have access to the information needed to file. In a remote era, it is no longer practical to have records and physical documents in a filing cabinet in an office building. Employees, their supervisors, and other stakeholders need compliance insights with a few clicks of a button. In a world adapting to COVID-19, only cloud-based compliance software provides the confidence to businesses as they grow.

As businesses get used to the new normal, one thing is certain: compliance obligations are not going away. Business owners that research their requirements and take proactive steps to comply are able to hire better talent and demonstrate credibility to their clients. And, in an uncertain world, it may even be a source of profitability.

Disclaimer: Harbor Compliance does not provide tax, financial, or legal advice. Use of our services does not create an attorney-client relationship. Harbor Compliance is not acting as your attorney and does not review information you provide to us for legal accuracy or sufficiency.

James Gilmer is a Compliance Specialist at Harbor Compliance, a leading provider of compliance solutions for companies of all types and sizes. Founded by a team of government licensing specialists and technology trailblazers, Harbor Compliance has helped more than 25,000 organizations apply for, secure, and maintain licensing across all industries. James is passionate about helping nonprofit organizations leverage compliance to enhance their fundraising and program activities and educating the sector on compliance issues. James is also a Co-Founder of Berks Sinfonietta, Inc., a nonprofit chamber orchestra located in Reading, Pennsylvania.