Secretary of State Compliances (SOS)
Compliance departments
Secretary of State (SOS)
Handles entity related tasks from incorporation to dissolution, including foreign business qualifications.
Each state's SOS has specific entity formation requirements.
Annual returns: the SOS compliance
Annual returns is the most important SOS compliance, filed annually within each state of business operation. Here, businesses annually report company basics, directors, officers, and share capital details.
Some exceptions:
- It’s combined with Franchise Tax Return in some states (Ex: Delaware, Texas)
- In some states, it’s combined with the Income Tax Return under the Department of Revenue (Ex: Ohio)
Frequency of compliances
- Annual or biennial filing requirements, vary by state.
- Some states have fixed due dates, others align with anniversary month.
Significance
Preserves good standing (certification given when entity has met all the legal requirements set by the state for doing business) and prevents penalties.
Consequences
Not adhering to SOS compliance leads to auto-termination and ineligibility for foreign business qualification or payroll registration.
Misinterpretation
Filing annual income tax alone fulfils the Secretary of State compliances. No, it doesn’t! Annual returns must be filed independently in most states, which is a SOS compliance.