Remaining in good standing with the government is essential when operating a business. Failure of a corporation or limited liability company in Texas to do so can cause the owner(s) to lose protection from personal liability for the entity's debts. In order to avoid losing this safeguard, regulation compliance can be critical.
Other than punctually filing necessary paperwork with the state, there are several other measures one can take to ensure that all formalities are in order. The first is signing all documents with the company's proper business name, as registered and on file with the state. Failure to do so in contracts can potentially render a document invalid. As part of this process, it may be necessary to file fictitious business name statements when the entity is doing business under something other than its full legal name. It is also important to make sure that personal and business financial records and transactions are kept separate and distinct from one another. Maintaining two accounts will also make submitting annual reports to the state easier.
Once a business becomes a corporation or LLC, it is required to file prescribed documents in a timely manner under applicable state law. Compliance with these requirements is necessary to continue in existence and avoid dissolution.
Other areas that must be kept current include having an agent for service of process and maintaining the right to do business in other jurisdictions. A business attorney may be able to help determine what documents will be required to be filed and periodically updated at the time a client is considering the formation of a new enterprise.
Source: Reuters, " Are You Putting Your Company's Good Standing At Risk?", December 12, 2013