What is a delayed filing?
A delayed filing allows you to complete and submit your business filings now, with a date you specify as the date your filing will take effect. Each state has it's own rules as to how far in advance they will accept a delayed filing, but you will typically be required to file 30 to 90 days before the desired effective date. For those who wish to start a business at the beginning of next year, now is a great time to submit your filings and jump to the front of the line.
What Is a "delayed effective date" of incorporation?
When you decide to file an LLC or corporation for your business, the process typically begins right after you submit the paperwork. Due to variable state processing times and other factors, the effective date of incorporation, or official start of your business, can be hard to predict.
What happens if you file too early? In some cases, you may be on the hook for the current year’s annual report and filing fees for the business. As long as your business formation goes into effect in the current year, you will owe the full amount.
A delayed filing is an option created to help solve this problem. It eliminates the unpredictability by allowing plenty of time for the state to fully process your paperwork and set your business into existence.
Who can benefit from a Delayed Filing?
Anyone looking to file a business close to the end of the year should consider the benefits of a delayed filing versus a standard incorporation filing. If you have some flexibility as to when your business will officially open, delaying the effective date of incorporation until next year is the perfect option for avoiding unnecessary filing fees for the current year.
Another benefit of a delayed filing is the ability to choose an exact start date for the business with importance in your particular industry, such as a holiday or day of recognition. The standard process of filing your paperwork would make this impossible. Your business is guaranteed a specified date of incorporation with a delayed filing, making it easier for you to organize your efforts and make arrangements that may be dependent on your filing date.
How does a delayed filing affect my taxes?
If you formed your business this year, you will be required to report and pay taxes to the IRS. This is true even if the business is formed in the last few months of the year. Additional fees, like those associated with annual reports, also may be required depending on your state of incorporation.
Since your business is not yet considered active until after the incorporation paperwork is complete, choosing a delayed filing option allows small businesses to avoid preparing a tax filing for their entity in the present year.
