Don't Forget Your Annual Report Deadlines

In Massachusetts, all organized and registered entities are required to file an annual report with the Massachusetts Secretary of State, Corporations Division, and pay the applicable annual fee. Depending on the type of entity that you operate, the deadlines for filing annual reports vary. Make sure to mark your calendar and stay on top of these deadlines so that you can maintain the legal status of your entity. 

Domestic (Massachusetts) and Foreign Corporation - File 2.5 months from the end of the fiscal year.  For most corporations ending the fiscal year on December 31st, this means the annual report must be filed no later than March 15th. 

Domestic and Foreign Non-Profit Corporations - File by November 1st.  This excludes churches, hospitals, religious organizations, schools, universities and colleges, and some library institutions. 

Domestic and Foreign Limited Liability Company (LLC) - File by the anniversary date of the LLC.  This means that the date that the entity was organized in Massachusetts, which will vary for each LLC. 

Recall from past blog entries that filing the annual report for your business is crucial for a number of reasons.  The most important reason is that if you do not file your annual reports and pay the application fee to the Secretary of State in Boston, he will administratively dissolve your entity. Upon dissolution, you are no longer a legal entity and have no authority to conduct business, such as entering into contracts, filing a lawsuit on behalf of the entity, etc. Based on past experience, it sometimes takes several years of unfiled annual reports and fees to accumulate before this occurs, however, there are reported instances where dissolution can occur after a number of months. It really depends on how quickly the Secretary of State Office discovers that your reports and fees are delinquent. It is an all too common occurrence that many businesses discover after several months (and sometime years) that the entity was dissolved, which leaves business owners scratching their heads as to what types of new issues may present themselves as a result of dissolution.  It is, therefore, recommended to stay on top of the annual report and fee deadlines and requirements, or contact a business lawyer if your business lies in a state of dissolution.   

Holding Business Officers and Directors Personally Liable: Part II

On November 4, 2015, the Law Office of Stefan Cencarik, PLLC, a Boston business lawyer, explained the criteria for disregarding the corporate entity, so that shareholders and corporate directors may be held personally liable.   This blog article will focus on the State statutory exceptions that permit direct liability of officers. 

 The Massachusetts Wage Act, M.G.L. ch. 149, § 148 – The Wage Act holds the president and treasurer of a corporation and any officers or agents having the management of such corporation: liable for the non-payment of wages to employees. In other words, Massachusetts business owners and top level managers can be subject to civil liability for non-payment of wages to employees. Those individuals will be personally responsible for payment of any overdue wages plus any double or treble damages  and legal fees awarded by judgment of a Massachusetts Court. In other words, failing to pay employees earned wages has severe consequences in Massachusetts. 

Worker's Compensation, M.G.L. ch. 152 - An employer is required to provide its employees worker's compensation insurance, and failure to do so will subject a corporation's president and/or treasurer to civil penalties, fines up to $1,500 and imprisonment up to one year. In this instance, the corporate veil cannot protect the officers of a corporation who fail to pay worker's compensation premiums. 

Massachusetts Withholding Tax, M.G.L. ch. 62B, s. 5 - Massachusetts employers and businesses paying wages to employees are responsible for withholding and paying tax to the Massachusetts Department of Revenue. Failure to withhold and pay taxes will subject the corporation officer or LLC manager to personal liability, and that person will be liable to the DOR for payment of the tax, until the business turns-over all overdue tax payments.   

Massachusetts Minimum Wage, M.G.L. ch. 151 - In Massachusetts, it is considered oppressive and unreasonable to pay any worker less than the applicable minimum wage. ($9.00 per hour in 2015; $10.00 per hour in 2016; and $11.00 per hour in 2017 and beyond).  Businesses that pay employees less than the statutory wage (docking wages; failing to pay interns or "temps") are presumed to be in violation of minimum wage laws and the corporate officers may be held personally liable. 

Despite these statutory exceptions to the corporate veil, a corporate officer will not be able to use the limited liability protection of the corporation to obtain immunity for criminal actions and/or intentional torts, such as assault and battery of a fellow co-worker.

The next blog article on holding corporate officers personally liable will address the Federal statute and case law exceptions to limited liability.