LLC Filing to Compliance: What Accounting Firms Need to Get Right

Accounting firms already guide clients through decisions involving business structure, tax treatment, payroll tax obligations, and growth. That puts them in a natural position to support another area businesses often struggle to manage: formation and ongoing compliance.

Services such as entity registrations, foreign qualifications, payroll tax registrations, annual reports, license renewals, and other compliance filings can help firms deepen client relationships, create year-round revenue, and differentiate their practice beyond traditional tax work.

Nellie Akalp, Founder and CEO of CorpNet

To explore how firms can add these services without overwhelming their teams or crossing professional boundaries, Ace Cloud Hosting spoke with Nellie Akalp, Founder and CEO of CorpNet.com – the smartest way to register for payroll taxes and maintain business compliance across the United States.

Nellie has extensive experience helping entrepreneurs start and maintain businesses and working with CPAs, attorneys, and other professionals who support client formation and compliance needs.

In this conversation, Nellie explains what a modern compliance service offering can include, where accountants should draw the line between tax guidance and legal advice, how technology and filing partners can reduce administrative work, and why security becomes increasingly important as firms handle more client compliance data.

1. Why should accounting firms think beyond tax returns and start looking at compliance services as part of client advisory?

Like other professional services providers, accounting firms face the challenges of attracting and retaining clients, staying competitive and relevant in an ever-evolving business environment, and finding ways to boost revenue without adding overhead costs or overburdening existing employees. Adding business entity formation and compliance filings to their suite of advisory services can help firms overcome all three of those pain points.

Business formation and compliance filings are value-added services that help business clients grow and achieve their financial goals. They’re a natural fit for accountants who are respected as trusted advisors. Because clients already rely on their accountants for advice and recommendations on selecting a business entity and tax classification based on financial considerations, compliance services organically complement and expand an accounting firm’s capabilities.

The advantages of offering formation and compliance services include:

Stronger client loyalty by establishing a firm as a strategic partner who can help clients with a full range of needs.
Increased profitability through integrating value-added services that naturally fit into a firm’s areas of expertise and its infrastructure.
Smooths out the revenue rollercoaster through improved cash flow beyond tax time.
Sharper competitive edge because a full-service firm will stand out as more credible and indispensable to clients with diverse needs.

When an accounting firm offers compliance services, it’s a big win for its clients, too. They save time because they don’t have to prepare and file forms on their own or look for another resource to handle it for them. And they gain peace of mind in knowing they can turn to a single, trusted partner for their business startup and growth needs.

2. What does a strong “compliance stack” look like for a modern accounting firm?

Clients’ needs will vary depending on their industry, physical locations, states where they have economic nexus, types of services and products they offer, and other factors. An accounting firm can tailor its services to its clientele’s needs and its own preferences.

That said, embracing a wide range of filings will enable a firm to cover nearly any need or requirement that businesses might face at any stage of their existence.

Formation & Expansion

Business entity registrations (e.g., Articles of Incorporation and Articles of Organization filings)
DBA (fictitious name) filings
Business license applications
Foreign qualification filings (for doing business in another state)
EIN applications
Registered agent services (in all 50 states)

Tax & Regulatory

501(c)3 filings
Sales tax registrations and reseller permits
Payroll tax registrations (for state income tax withholdings and state unemployment insurance) and payroll tax account closures
S Corporation and C Corporation tax elections
IRS Notifications and Change Letters

Ongoing Maintenance

Initial and annual reports
Amendments and business name changes
Business license renewals
Certificates of Good Standing and reinstatements (if a business falls out of good standing with a state)

Exit/Changes

Dissolutions
Withdrawals from foreign qualification in a state
Entity conversions (e.g., switching from an LLC to a C Corporation)

3. When clients come to accounting firms to discuss business filing or entity setup, can an accounting firm help set up an LLC, and where should they draw the line between filing support, tax guidance, and legal advice?

This is an important consideration, for sure, and it pays to be careful not to overstep because offering legal advice without a license to practice law is illegal.

Firms sometimes hesitate to explore the opportunity because they fear it crosses over into the realm of legal services. While it’s wise for clients to consult a lawyer for legal guidance when starting or making changes to a business entity, business owners may prepare and file formation and compliance documents on their own or authorize a third-party (e.g., their accounting firm) to complete those tasks for them.

Accounting firms may give clients insight about choosing or making changes to a business structure provided they stay within their staff’s certified areas of expertise and credentials, while directing clients to an attorney when legal guidance is required.

Below are some examples of questions accountants can typically answer without fear of crossing the line:

If a client has multiple businesses, how should they structure them for optimal tax outcomes?
Which states offer the most favorable income tax rates for a Corporation?
Will a client’s LLC benefit most from choosing pass-through taxation, S Corporation tax treatment, or taxation as a C Corporation?
What options does a partnership have if its owners want to lower their self-employment tax burden?
Does the client’s business have to register for state payroll taxes in an employee’s state of residence if the employee lives in a different state but works in the state where the company is located?
What does the client need to do to register their business entity for payroll taxes?
Which business entity and state of formation will offer the most favorable tax treatment and growth potential?

And here are some questions that should be directed to a legal professional:

What are the personal liability advantages of changing from a Sole Proprietor to an LLC?
What should a client’s C Corporation include in their bylaws?
Is one state or another more business-friendly from a legal environment standpoint?
Does having general liability insurance offer the same protections as forming a limited liability company?

After a client has made an informed decision based on your firm’s input and an attorney’s advice, it is not the unauthorized practice of law for an accounting firm to prepare and submit the necessary business registration and compliance forms on their client’s behalf.

4. What risks do firms take on when they add services like business formations, registered agent support, annual filings, or payroll tax registrations?

As I mentioned above, accounting firms should stay in their lane regarding offering advice on choosing and making changes to a business structure. If an accounting firm tries to take on these services without a strategic partnership with a reputable business filings provider, it could face the risks of overwhelming its staff and increasing costs as it overhauls its infrastructure.

It also risks missing clients’ compliance deadlines, which can have major consequences; a missed annual report or registered agent lapse can knock a client’s entity out of good standing or even trigger administrative dissolution. Fortunately, those risks can be avoided by taking advantage of a business filings company’s partner program and leveraging their order system and infrastructure as they handle order fulfillment behind the scenes.

5. How can firms use technology, workflows, and clear accountability to manage compliance deadlines without overwhelming their teams?

A few key ingredients create a recipe for success.

First and foremost, a centralized platform for entity management is essential. Requirements and deadlines vary by state, and clients with entities in multiple states may have anywhere from 10 to more than 50 unique filing deadlines each year.

So, a firm must have access to a system capable of housing clients’ compliance information, monitoring and sending automated notifications of upcoming compliance deadlines, and placing and tracking orders. While this sounds like it would require extensive changes to a firm’s systems and processes, it doesn’t have to.

By partnering with an online business filings company, an accounting firm need not set up accounts with every state or local government authority to handle client filing because it can use the filings provider’s ordering infrastructure for placing orders in all 50 states and the jurisdictions within them.

Integrations between the entity management system and a firm’s other systems (accounting, CRM, ERP, etc.) further streamline the process of handling formation and compliance offerings. When a firm treats entity compliance as a foundational piece of its operations and partners with a formation and compliance filings company that has strong integration capabilities, it can more effectively maintain consistency of client information across its systems without tasking its team with redundant data entry.

Last, but certainly not least, outsourcing the tracking and submission aspects to a partner who specializes in business formation and compliance and has a centralized system and robust integrations reduces a firm’s administrative workload and reduces the risks of missed deadlines and filing errors.

Partnering with a reputable business filings provider who has an established system and intuitive portal for documenting clients’ entity information and compliance requirements helps ensure records are accurate and current across all jurisdictions without burdening the firm’s staff with tedious research and follow-up tasks. By retaining advisory oversight while outsourcing the execution of entity filings, an accounting firm can increase revenue year-round without adding significant overhead to its bottom line.

6. Why is secure access to client records, accounting apps, tax software, and compliance documents important as firms expand these services?

Maintaining the confidentiality of clients’ information is of the utmost importance as a firm expands its offerings. There’s little that can destroy client trust more quickly than when customers’ data is compromised! Naturally, protection is only as strong as the weakest link, so it’s imperative that all systems—including the business entity management platform—are equipped with the most effective, up-to-date cybersecurity measures that safeguard data.

When choosing a business filings provider (or implementing your own infrastructure) to handle your formation and compliance orders, fulfillment, and monitoring, make sure the necessary security protocols are in place to protect customer information across all systems and processes.

Data encryption
Multi-layer firewalls
Rigorous access controls
Staff training on security measures, company privacy policies, and strict personally identifiable information guidelines

In addition, firms should ask any prospective partner about their security certifications (SOC 2, etc.) before trusting them with client data.

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Expanding Compliance Services Without Adding More Complexity

Nellie’s perspective shows how formation and compliance offerings can help accounting firms provide more year-round value to clients while expanding beyond traditional tax work. Doing this successfully, however, requires clear professional boundaries and an efficient way to manage filings, deadlines, and client information.

With centralized workflows, appropriate security controls, and reliable filing support, accountants can remain focused on advisory work and client relationships while technology and specialized partners handle much of the administrative execution.

As firms expand their capabilities, they also need secure, reliable access to the accounting and tax applications their teams use every day. Ace Cloud Hosting helps accounting firms access these business applications remotely through managed cloud environments.

Is your firm considering compliance services without adding significant overhead? Share your thoughts in the comments.

From LLC Filing to Compliance: What Accounting Firms Need to Get Right