Does My Organization Have an Entity Compliance Problem?
Businesses have always had to comply with legal and regulatory requirements. Filing the odd annual report and renewing a business license are as workaday tasks as filing taxes and running payroll.
Unfortunately, the work of staying compliant has become less “workaday” in nature in recent years. As business becomes more global, and as remote work booms, organizations now have to manage more entities than ever before. In short, the work of staying compliant has gotten a lot more complicated.
And yet, the consequences of delinquency remain the same.
Noncompliance can cause a host of issues – not limited to hefty fines, wasted time, and dissolved entities. In some industries, noncompliance even has the power to block deals and halt mergers. And no one wants that.
For the health of your organization, it is critical to know where you stand when it comes to entity management. Here are some commonly asked questions about the process to help you determine whether your business has a problem:
What is entity management?
First things first: entity management is the process of organizing and filing a business’s legal entity documentation (annual reports, business registrations, DBA/fictitious names, business licenses, etc.) so it complies with state and local jurisdictions.
The process of managing entities includes tracking and accessing documents like audits, mergers, reports, and filings that are essential for operations. Multiple stakeholders and departments (including legal, finance and HR) generally play some role in maintaining legal compliance.
Having effective entity management practices in place is essential for any business that wants to maintain legal compliance (in short, all). Implementing best practices is especially critical for organizations looking to scale, gain a competitive advantage, or pursue international opportunities.
What are the common compliance obligations for entities?
Common compliance obligations for entities vary depending on the jurisdiction and industry. However, some typical obligations include filing annual reports, maintaining up-to-date registrations, renewing business licenses, adhering to tax obligations, and complying with specific regulations related to the industry or sector.
What are some potential entity compliance challenges?
Some entity compliance challenges include managing compliance requirements across multiple jurisdictions, keeping up with changing regulations, maintaining accurate and up-to-date records, ensuring adherence to compliance policies across the organization, and managing compliance during personnel changes.
So… do I have an entity compliance issue?
The short answer: If your process is heavily manual, or you are working in spreadsheets, then yes, you have an entity compliance issue. For a majority of organizations, spreadsheets and manual processes are simply not advanced, transparent, or collaborative enough to maintain legal compliance effectively. If you identify with this process in your organization, consider the questions below.
Do I need an audit trail?
Yes, an audit trail is a necessary part of entity management.
Maintaining an audit trail allows businesses to track changes made to entity information, document revisions, approvals, and any other relevant actions. And, if internal or external audits ever need to be conducted for regulatory purposes, having an audit trail is necessary.
It is nearly impossible to maintain a reliable audit trail if entities are managed on a spreadsheet. Spreadsheets do not allow users to view all changes that have been made, which makes it difficult for them to maintain data integrity and identify errors or inconsistencies. And let’s face it, working in a spreadsheet is simply manual labor.
What about personnel changes?
If you are still using outdated and manual methods for your business’s entity management, there is no guarantee of continuity when personnel changes occur – and they will occur. When no single source of truth exists (and it cannot when spreadsheets are used) significant challenges and potential disruptions are nearly inevitable.
When employees who exclusively use manual methods to manage entities leave the company or change roles, their knowledge and expertise leaves with them. When new employees inherit their workload documentation – which may or may not be reliable – it is easy for important information to slip between the cracks.
The resulting poor knowledge transfer can lead to a lack of continuity and consistency in how entity data is organized, updated, and accessed.
Can’t I just outsource entity management?
Outsourcing entity management offers relief from the daily grunt work of maintaining legal compliance but can carry data accuracy and continuity risks.
By entrusting a third-party provider to manage your entities, you lose direct control over the process and must rely on your vendor’s capabilities and diligence. Ensuring compliance becomes challenging without oversight or real-time visibility, increasing the risk of non-compliance and associated consequences.
Data accuracy may suffer due to potential delays, or errors in service of process or record updates. Disruptions in accessing and managing entity information can occur if the outsourced provider falters, leading to complicated transitions or operational impacts.
The Solution to Entity Compliance Issues? Filejet.
If your organization uses a spreadsheet to manage entities – and struggles to maintain compliance – you are not alone. Among the gaps discovered in Filejet audits, 44% of clients have lost or “orphaned” entities and 66% have entities that are out of compliance. Luckily, gaining control of entity management is possible. And it starts with a combination of automated software and concierge-level service.
With a unique combination of service and software that automates U.S. and international annual report, business registration, and DBA filings, Filejet is the entity management solution you don’t have to think about – unless you want to. The Filejet dashboard provides instant visibility into your entities, fees, filing dates, and documents.
Whatever can’t be automated will be handled by the Filejet team – who does what it takes to ensure clients never fall out of compliance.
Benefits of Filejet for Business Owners
Filejet checks off the necessary compliance requirements and provides business owners with the support they need.
- Audit Trail
- Business License Renewal
- Registered Agent Services
- DBA Automation
- International Support
- Dedicated Service Representative
- Varied Payment Options
- Unlimited Users
- Unlimited Storage
- Formation Creation
- Transactional Support