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5 CHANGES EVERY CALIFORNIA ENTREPRENEURS SHOULD KNOW ABOUT

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5 CHANGES EVERY CALIFORNIA ENTREPRENEURS SHOULD KNOW ABOUT

California: Changes to Fictitious Business Name Statements

The Los Angeles County Registrar/Recorder County Clerk’s Office will now require a notarized Affidavit of Identity form to be filed with every Fictitious Business Name Statement. Taking effect on January 1, 2015, all original, refile, and new Fictitious Business Name Statements will need to be accompanied by the new form or they will be rejected. Please note that no additional fees will be charged. If you have any questions regarding this change, give us a call at 800.722.59.56

California: Businesses Required to Electronically File Tax Returns

Effective January 1, 2015, California Assembly Bill 2754 (AB 2754) requires business entities to electronically file (e-file) their tax returns for taxable years beginning on or after January 1, 2014. Under the new law, the following types of returns must be e-filed:

  • Corporations: Forms 100, 100S, 100W
  • Partnerships: Form 565
  • LLCs: Form 568
  • Exempt organizations: Form 199

If a business entity required to e-file fails to do so, they will be subject to a $100 fine for the initial e-file failure and $500 for each subsequent failure.

According to the State of California Franchise Tax Board, the reason for AB 2754 is to reduce income tax return processing costs and error rates. Exception waivers may be requested if the taxpayer is unable to meet the requirements due to technology constraints, an undue financial burden, or other circumstances that constitute reasonable cause and not willful neglect.

For more on AB 2754 and the changes it implemented, read the bill in its entirety here.

California: Changes to Flexible Purpose Corporations

Back in 2011, California passed the Corporate Flexibility Act establishing the flexible purpose corporation (FPC), a corporate form that emphasizes a special purpose mission. California Senate Bill 1301 (SB 1301) renames this act to the Social Purpose Corporations Act in addition to renaming FPCs as “social purpose corporations” (SPCs).

Any FPC formed before January 1, 2015 will now be considered a SPC, though older companies are not required to change their names or amend their articles of incorporation. SB 1301 also requires directors to make decisions that further the mission and special purpose of the corporation. Previously, this stipulation was encouraged, but not required. The bill’s full text can be accessed by visiting the California Legistlative Information page.

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California: Changes to Notary Certificate Language

Effective January 1, 2015, notaries are required to include a specific consumer notification statement on acknowledgements, jurats, and all proof of execution documents. This notification reads as follows: “A Notary Public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.”

Changes to the notary certificate language aim to reduce fraud by letting consumers know that the notary’s seal and signature do not authenticate or endorse the contents of a document. The new wording is required to appear in a box at the top of the certificate, and must be legible. Notaries that continue to use the old wording after January 1, 2015 will be out of compliance with state law and subject to fines from the California Secretary of State, in addition to potential civil liability. For more information on notary changes, give us a call at 800.722.5956 or read the official bill here.

California: Changes to Existing Forms

As of January 1, 2015, the California Secretary of State (CA SOS) implemented several changes to existing forms pertaining to business entities filed with the CA SOS office. The changes include updates to forms related to limited partnerships, foreign limited partnerships, limited liability partnerships, limited liability companies (LLCs), foreign LLCs, and Certificate of Conversions among other things. Old forms will not be accepted after January 1, 2015. For the new version of the forms, visit the CA SOS Forms

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