Did you know you can pick the effective date your company is officially in business? Many businesses often opt for the standard filing process. This is when paperwork for incorporating or forming an LLC is filed in the order it is received by the Secretary of State. However, standard filing often takes days, even weeks, to process filing documents. So, entrepreneurs may consider a secondary filing option. Submitting a delayed filing allows small businesses to set their start date — and know the exact date of incorporation.
Filing your incorporation paperwork at the end of the year may be the best time of year to do it. Let’s take a closer look at the benefits that a delayed filing provides small business owners, particularly amid COVID-19.
Why Choose a Delayed Filing?
Delayed filings go by a few different names. Some of these include delayed effective date of incorporation and delayed incorporation filing. Each name fulfills the same function. A delayed filing allows small business owners to set a date for when they would like the company to be officially in existence.
What makes this type of filing useful to entrepreneurs? Here are some of the benefits small business experience with a delayed filing.
Choose a Significant Date
How far in advance can you reserve a date through a delayed filing? Generally, this filing may be done 30 to 90 days out in the future. It depends on the state of incorporation, so it’s important to check in and make sure your state allows delayed effective dates.
If it turns out your state is among those that allow delayed filing requests, like California, Florida, and Texas, you may submit your filing and request the date in which you would like the company to be recognized as being in existence.
Depending on your business and its backstory, your incorporation date may have great significance. For example, it could be commemorative of the day you graduated from culinary school and knew you wanted to open a restaurant. Or, it could honor the birthday of an influential mentor that inspired you to start a business. The date might even be set for a month that is specific to your industry, like the first day of summer for a company that sells outdoor sports equipment. Any date that has a special meaning to you is one where you can incorporate and be in existence with a delayed filing.
Save Time and Money
Currently, we are in mid-October. Incorporating a business before the end of the year gives entrepreneurs less than three months to file their incorporation paperwork. If you choose to incorporate through a standard filing process or an expedited filing, your business will likely be in existence before the end of 2020.
However, there is a catch to filing before the end of the year. Depending on your business structure, you will need to file any annual maintenance, like annual reports, that is required for your entity formation. You will also need to file and pay taxes for the year you were in business. What if the effective date was for just one month in 2020? You would still be held liable for filing for this tax year and every year your company is in existence. Additionally, depending on your state of incorporation, you may be liable for paying state franchise taxes.
Need more time to prepare and get your records in order? A delayed filing will give you the peace of mind in being able to set a date into the future where your business is in existence.
Over the next few months, consider setting an effective date of January 1, 2021 or any other date in 2021. This does more than ensure you will save money for the 2020 tax year. It bumps other filings, like annual reports, up another year. A delayed filing also gives entrepreneurs the chance to take care of other important aspects related to their small business. Use the extra time to register for trademarks, obtain tax IDs that allow you to set up and open a business bank account, and continue setting goals in your business plan.
Set an Official Date in Business
The caveat of committing to a delayed effective date of incorporation is that once you do it, you cannot go back. This is officially the effective date of incorporation.
Your business will be in existence on this date, so everything in your filing paperwork needs to reflect the entity’s exact needs. For example, be mindful that you are picking the proper entity formation. If you find you struggle to determine which business formation is best for your startup, consult an attorney or lawyer for additional counsel and legal advice.
New Year, Fresh Start
2020 has been a year of unprecedented events and changes. There is a narrow window of time to file a standard incorporation before 2020 ends. Some entrepreneurs may worry they’ll get caught in a filing backlog because of it. However, the one certainty is that a delayed filing ensures you are confirmed for business in 2021.
We’re ready to help you submit your filing paperwork! Jump to the front of the incorporation line now with our team’s help. Call us at 1-877-692-6772 to get started with your delayed filing.