How to Reduce Legal Entity Management Costs
In-house legal teams are often challenged by the daily grind – and that’s before having to deal with renewing business licenses, filing annual reports and making payments, and dealing with other entity management issues. Entity renewals can easily get lost in the shuffle and lead to costly mistakes. But you know this, so it’s time to solve this problem once and for all.
That’s where legal entity management software comes in. Cloud-based and automated, entity management software lets in-house legal teams ensure all entities are compliant with all relevant documents stored in one place – with minimal time required by in-house counsel and reduce the risk of penalties and entity dissolution.
The Hidden Costs of Using Registered Agents
We hear time and time again how in-house counsels thought their registered agent was handling all entity compliance, only to realize that isn’t true – especially when they get nastygrams from a secretary of state – or worse.
When they ask their registered agent for a list of their entities and compliance status, they get the runaround. When they ask how much they’re paying, they only hear crickets.
The Costs of Non-Compliance
Entity management is complicated because every state has different filing requirements in terms of dates and fees for both entity formation and renewals – and they change over time. The same is true for establishing and renewing fictitious business names or doing-business-as (DBAs).
If you have entities in other countries, these issues are compounded.
Inefficient entity management leads to non-compliance even when using a registered agent. That’s because many in-house counsels and the registered agents rely on manual entity compliance processes that are error-prone and often lead to late filings or none at all. These lead to penalties, threat of entity dissolution, and late fees with interest when you file to catch-up.
These costs may only be $2,000 to $3,000 per entity but, if you have a few entities across several states, the costs can add up – and who wants to deal with any fines at all, especially if you’re paying a registered agent to avoid this?
Then there’s the opportunity cost: every minute you spend on legal entity management, you’re not spending on more important things, from filing to searching for entity information.
Related blog: 5 Major Entity Compliance Mistakes to Easily Avoid
As more grow nervous about a recession, there’s a big push for all departments, including legal, to identify and reduce unnecessary costs. This is where entity management software can be a quick win.
According to the 15th Annual Law Department Operations survey, “Not surprisingly, cost containment and budget management is among the biggest challenges legal ops professionals face. It ranks No. 2, behind business process improvements implementation.”
Entity management software does both: it streamlines entity management compliance while reducing the costs of doing so – when compared to using costly registered agents and the opportunity cost from the amount of time the legal department spends on it. These savings are even higher if outside law firms are involved in legal entity compliance.
Effective Entity Compliance Management
Legal entity management software offers many functions for reducing the risk of non-compliance and being your single source of truth.
When considering what entity management software to use, consider the following as points of comparison:
- User-friendly and intuitive interface
- Cloud-based and SOC compliant
- The option for your filings to be done for you automatically, ever year as part of a managed service
- Automated filing alerts if you choose to file yourself with Google Calendar integration
- The ability to create new entities of all kinds and pay all associated fees directly from the Filejet platform
- A centralized hub for all entity documentation for everyone needing access, including external partners
- Communication of what data is needed to ensure compliance and your renewals have up-to-date information
Filejet Entity Compliance Software
Filejet includes all of the functionality and options above.
To ensure security of your information, Filejet uses one of the most secure work environments for our off-site cloud servers, Microsoft Azure Server. Filejet is SOC 2 compliant, which is a voluntary compliance standard for service organizations created by the American Institute of CPAs (AICPA) that specifies how entities should manage customer data. The standard is based on the following Trust Services Criteria: processing integrity, security, availability, privacy, and confidentiality.
Get a Quick Win
Stop putting up with poor service from registered agents that aren’t getting the job done and free your paralegals from Excel Hell. Your finance department will thank you for cutting unnecessary costs. Filejet can also help you manage summonses and garnishments.
If you’re interested in trying out Filejet, contact us or request a free compliance audit to learn more about our compliance management software with fully managed service option. You’ll learn the instant ROI you can expect from avoiding penalties, late fees, and having to spend your time managing entity issues.