Written by Benny L. Kass
While this column deals with a local, District of Columbia, issue, it may be a wake-up call for all business’, property managers and community associations to get your house in order. Are you in good standing in your state? And do you have all of the required licenses required in your jurisdiction? Has your certificate of organization been revoked? And does your state have any amnesty program?
In order to legally transact business here, a corporation must register with DCRA. Once registered, the company must file a status report every two years. Additionally, most businesses are required to obtain a “basic business license”.
Unfortunately, many businesses — especially small corporations, condominium and cooperative associations — often forget to renew their status. Most corporations have a local resident serve as Registered Agent. That person is charged with receiving the notice for filing the two-year report, and making sure the corporation is up to date. And when someone files a lawsuit against a company, the agent is usually served with the complaint.
However, especially with community associations, registration is a very low priority. Typically, when a condominium is created, the developer registers the association and selects the registered agent. But when transition occurs and the condo takes over control, all too often no one knows about the registration and Registered Agent requirement.
If a business has an expired Basic Business License, or the corporate registration is revoked for non-filing, it can bring itself current by filing all past due biennial reports with the accompanying filing and late fees. This can range between $50 and $100 for every year the business was not registered. This can be a lot of money, depending on how many years the registration has lapsed.
According to the DCRA press release announcing the program, this “provides business owners a unique opportunity to come into compliance with District regulations and requirements without facing associated fines or penalties accrued due to failure to obtain or renew a business license, corporate or weights and measure device registration.” However, DCRA added that “notice of infractions will be excluded from this program and will not be reversed.”
What are the consequences of not registering or not obtaining a business license. If you are a home improvement contractor without a home improvement contractor license, you may have to refund your customer all of the moneys you received for the job, regardless of the quality of your work.
If you are not registered, or have not updated your registered agent, you may be hit with a money judgment from the courts. The plaintiff has filed a lawsuit against you, and properly served the Registered Agent on Record — although that person no longer serves in that capacity. Because you did not file an answer to defend yourself, the court issued a default and granted the plaintiff’s request for money damages.
According to DC law, if a business license or corporate status has been revoked, it cannot continue to conduct business other than for the purpose of “winding up its activities”. Furthermore, it can be hit with fines and penalties for non-compliance with the laws in the District of Columbia.
The amnesty program will end on February29. All businesses — and especially community associations — should confirm they are properly registered. Many landlords do not know they need a business license. While the amnesty program will not be available for anyone that never registered, this is a reminder that everyone should make sure they are legally entitled to do business here in Washington.