Business documentation compliance audits

Purpose and scope - A documentation compliance audit verifies that a business’s corporate/LLC records, state filings, tax and payroll records, licenses, and governance documents are current, accurate, and sufficient to support legal protections, tax positions, banking relationships, and regulatory compliance.

Target items for review include formation filings, governing documents, annual/biennial state filings, registered agent, EIN and tax filings, meeting minutes/resolutions, contracts, permits/licenses, payroll and employment records, and any BOI/FinCEN obligations. 2) High-level state-specific context - Annual/biennial report rules, due dates, fees, and whether an initial report is required vary widely by state; almost every state requires some periodic report.

Track each state’s Secretary of State (or comparable agency) pages, or use aggregated 50-state resources to find exact due dates and fees. Missing state filings is one of the most common causes of loss of good standing and potential personal exposure for owners. 3) Key recent federal change to note - FinCEN (Corporate Transparency Act implementation): As of March 26, 2025, FinCEN issued an interim final rule removing the BOI reporting requirement for entities created in the United States (domestic reporting companies); foreign entities that qualify as reporting companies still may have deadlines.

Verify whether your entity is exempt or required to file and, if required, meet FinCEN deadlines for foreign reporting companies. 4) Practical compliance audit checklist (step-by-step) A. Formation and identity - Confirm Articles of Organization/Articles of Incorporation (state-filed formation document) and proof of filing. - Confirm EIN (CP-575 letter or IRS documentation) and that the EIN matches tax filings and bank accounts. - Confirm registered agent appointment in the state of formation and in any state(s) where you’re registered to do business.

B. Governance documents - LLCs: locate and review Operating Agreement; ensure it reflects ownership percentages, capital contributions, membership transfers procedures, voting and management structure. - Corporations: locate bylaws, stock ledgers, shareholder lists, stock certificates (or digital equivalents), and records of issuance and transfers. - Minutes and resolutions: verify minutes for initial organization, annual meetings, major corporate actions (loans, authorizations, officer appointments), and any board/member approvals for material transactions.

C. State filings and good-standing items - Annual/biennial reports: confirm filing frequency and next due date for each state where entity is domestic or qualified foreign.

Note initial-report requirements where applicable. - Franchise tax and state tax registrations: confirm payments and filings; identify states with franchise taxes or privilege taxes. - Certificates of Good Standing (if needed for banking, lending, or foreign qualification).

D. Licenses, permits, and industry-specific compliance - Collect copies of business licenses, permits, professional registrations, health/safety certificates, and verify renewal dates.

E. Tax, payroll and financial records - Corporate/partnership/LLC tax returns and supporting schedules; payroll filings and deposits; Form 941/940 and W-2/W-3 records. - Bank statements, reconciliations, accounting records, receipts and invoices supporting deductions. - Retention: follow IRS guidance for how long documents should be kept (keep records as long as needed to prove items on tax returns; employment tax records at least 4 years). (See IRS guidance link below.) F.

Contracts and material agreements - Review key customer, vendor, lease, loan, insurance, IP assignment, and independent contractor agreements for signatures, effective dates, renewal terms, and notice obligations.

G. Beneficial ownership & AML/KYC-related items - Confirm current status re: BOI/FinCEN (see FinCEN update): determine whether the entity or any foreign-formed reporting company must file, and collect supporting identity documents used for KYC/AML for banking.

H. Records management & security - Confirm where the official corporate minute book is stored, who has access, and whether electronic records are backed up and retained securely.

Purpose and scope

2) High-level state-specific context - Annual/biennial report rules, due dates, fees, and whether an initial report is required vary widely by state; almost every state requires some periodic report. Track each state’s Secretary of State (or comparable agency) pages, or use aggregated 50-state resources to find exact due dates and fees.

Missing state filings is one of the most common causes of loss of good standing and potential personal exposure for owners. 3) Key recent federal change to note - FinCEN (Corporate Transparency Act implementation): As of March 26, 2025, FinCEN issued an interim final rule removing the BOI reporting requirement for entities created in the United States (domestic reporting companies); foreign entities that qualify as reporting companies still may have deadlines.

Verify whether your entity is exempt or required to file and, if required, meet FinCEN deadlines for foreign reporting companies. 4) Practical compliance audit checklist (step-by-step) A. Formation and identity

- Confirm EIN (CP-575 letter or IRS documentation) and that the EIN matches tax filings and bank accounts.

- Corporate/partnership/LLC tax returns and supporting schedules; payroll filings and deposits; Form 941/940 and W-2/W-3 records.

- Retention: follow IRS guidance for how long documents should be kept (keep records as long as needed to prove items on tax returns; employment tax records at least 4 years). (See IRS guidance link below.) F.

Contracts and material agreements

• A documentation compliance audit verifies that a business’s corporate/LLC records, state filings, tax and payroll records, licenses, and governance documents are current, accurate, and sufficient to support legal protections, tax positions, banking relationships, and regulatory compliance. Target items for review include formation filings, governing documents, annual/biennial state filings, registered agent, EIN and tax filings, meeting minutes/resolutions, contracts, permits/licenses, payroll and employment records, and any BOI/FinCEN obligations.
• Confirm Articles of Organization/Articles of Incorporation (state-filed formation document) and proof of filing.
• Confirm registered agent appointment in the state of formation and in any state(s) where you’re registered to do business. B. Governance documents
• LLCs: locate and review Operating Agreement; ensure it reflects ownership percentages, capital contributions, membership transfers procedures, voting and management structure.
• Corporations: locate bylaws, stock ledgers, shareholder lists, stock certificates (or digital equivalents), and records of issuance and transfers.
• Minutes and resolutions: verify minutes for initial organization, annual meetings, major corporate actions (loans, authorizations, officer appointments), and any board/member approvals for material transactions. C. State filings and good-standing items
• Annual/biennial reports: confirm filing frequency and next due date for each state where entity is domestic or qualified foreign. Note initial-report requirements where applicable.
• Franchise tax and state tax registrations: confirm payments and filings; identify states with franchise taxes or privilege taxes.
• Certificates of Good Standing (if needed for banking, lending, or foreign qualification). D. Licenses, permits, and industry-specific compliance
• Collect copies of business licenses, permits, professional registrations, health/safety certificates, and verify renewal dates. E. Tax, payroll and financial records
• Bank statements, reconciliations, accounting records, receipts and invoices supporting deductions.
• Review key customer, vendor, lease, loan, insurance, IP assignment, and independent contractor agreements for signatures, effective dates, renewal terms, and notice obligations. G. Beneficial ownership & AML/KYC-related items
• Confirm current status re: BOI/FinCEN (see FinCEN update): determine whether the entity or any foreign-formed reporting company must file, and collect supporting identity documents used for KYC/AML for banking. H. Records management & security
• Confirm where the official corporate minute book is stored, who has access, and whether electronic records are backed up and retained securely.

Common pitfalls observed in audits - Missing operating agreement or bylaws, or those not updated after ownership changes. - Failure to file state annual/biennial reports or pay franchise taxes leading to loss of good standing or administrative dissolution. - Missing meeting minutes or resolutions for major decisions (loans, capital contributions, officer appointments). - Incomplete payroll/employment records and missed payroll deposits that trigger penalties. - Failure to maintain copies of licenses/permits and not tracking renewal deadlines. - Out-of-date registered agent information causing missed service of process or notices.

Remediation steps (prioritize and act quickly) - For missed state filings

file outstanding annual/initial reports immediately, pay fees/penalties, and request reinstatement if administratively dissolved. - For governance gaps: prepare retroactive minutes/resolutions documenting past actions, have owners/managers ratify key decisions in writing, and update governing documents to match practice. - For tax and payroll errors: consult a tax professional, file needed returns and forms, calculate and remit payroll taxes plus penalties and interest; consider voluntary disclosure programs if large liabilities exist. - For missing licenses: stop regulated activities if required, obtain necessary permits ASAP and document corrective steps. - Document remediation steps and keep the remediation file as part of the compliance records.

Ongoing program recommendations (preventive) - Centralized compliance calendar (state SOS filing dates, license renewals, payroll deposit dates, tax return deadlines). - Annual internal compliance audit (quarterly checks for larger businesses) and an owners’/board checklist before year-end. - Use registered agent and/or compliance services to monitor SOS deadlines across states if you operate in multiple jurisdictions. - Keep a formal minute book (electronic copy + secure physical copies if desired), and use checklists for signatory authority and contract approvals.

Where to find authoritative state-specific deadlines and resources - Secretary of State (or equivalent) websites for each state

primary source for annual/biennial report requirements, fees and deadlines. - Aggregators and compliance services (e.g., Harbor Compliance, CorpNet) provide 50-state tables and managed filing services for annual reports and SOS requirements. 9) Useful templates and resources (start here) - FinCEN BOI page — verify reporting obligations and any deadlines (especially for foreign reporting companies). - IRS Recordkeeping guidance — for how long to keep tax and employment records and other retention guidance. - SBA Stay Legally Compliant guidance — overview of internal requirements and state filing types and common obligations. - 50-state annual report lists and compliance services (CorpNet, Harbor Compliance) — for finding exact state deadlines and filing details. 10) Quick action checklist (what to do next, in order) - Step 1: Identify where the company is formed and all states where it’s registered to do business. - Step 2: Pull formation documents, EIN proof, operating agreement/bylaws, latest annual/biennial report, and registered agent confirmation. - Step 3: Confirm payroll/tax filings & bank account signatories; pull last 3 years of tax returns and supporting docs. - Step 4: Check licenses/permits and their renewal dates. - Step 5: Run the remediation steps above if gaps are found; document everything and set calendar reminders.