Business Compliance Reset: What's Changed in 2026

The first quarter of the year is a critical time for business owners to check in on legal, administrative, and human resources matters to make sure they are still operating in compliance. For CT businesses, there are some changes in 2026 that makes this even more important. 

In this episode, Attorney Kate Cerrone shares what business owners need to know and do now.

Attorney Kate Cerrone is a real estate and business law attorney practicing in Connecticut. Learn more at KateCeroneLaw.com. 

Transcript

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Welcome to Work. Life. Law. with Attorney Kate Cerrone. Business owners, you'll want to pay close attention to this episode as we cover why it's so important to do a reset on your business compliance requirements and what to look for. So, Kate, why is now a good time for business owners to have this top of mind? It's good to use the beginning of the year as a milestone to take a look at what is required and what you may need to update. So the top priority is your annual report with the Connecticut Secretary of State. The reason that's important is your designation as a limited liability company or a corporation provides you legal liability protection. So that means that you have to maintain this entity as being separate from you. When you registered your business with the Secretary of State, that is what you, you have done. You have set up an independent legal entity. In order to maintain that independent legal entity, you have to do your annual report, so once a year. Connecticut limited liability companies file their annual reports between January 1st and March 31st of each year. Corporations file by the last day of their anniversary month. So you are letting the Secretary of State know that you are still an ongoing business, and then you update whether there have been any recent changes to your membership, to your shareholders, to your registered agent. Ok now what about brand new business owners who maybe just started business near the end of last year and have never been through this process before what should they expect? So brand new business owners, you will get a notification from the Secretary of State. Now, that being said, whether that goes through into your actual inbox or not, you're still responsible to file that annual report. You may see that notification reminder come over and not even be aware of what an annual report is. A lot of people think of annual reporting as being tax reporting or being a financial report. This is a set of simple questions. You can go online, and you can set up an account so that you can easily file this annual report with the Secretary of State on their website. They will ask you if there have been any changes in the name of your business in your membership, in the number of shares or your shareholders if you happen to be a corporation, if you have changed your location, if you've changed your email address or your telephone number, if you've changed your registered agent. If you recall, your registered agent is your individual or organization that has agreed to accept all of your legal service and pleadings, should that ever be required. It's just always required to have a Connecticut presence in the state so that they may be served in case of any legal issues. So if you've changed your registered agent, you would also have to update the Secretary of State. For limited liability companies, it's an $80 fee. It is, I believe, either a 120 or 150 fee for corporations. So and it's very important, even though it's a very simple report, and it may seem just so administrative to you, it will make all the difference as far as your, your liability protections. Because if, God forbid, there be some legal problem during the year, and you haven't kept up to date with your Secretary of State filings, there will be a presumption that you are not an ongoing legal entity, and you may lose your liability protection. So very important to do that annual report. Well, if you go to get a loan, the lender will ask for your certificate of legal existence to prove that you are an entity and that you are in good standing and able to borrow the funds. You will not be granted a certificate of legal existence until you catch up all of your past annual reports. That can be done. As long as you have missed the deadline in good faith, the Secretary of State will let you catch up on them without a penalty. So it's very important if you're going for a loan. It's very important if you are leasing property. Your landlord will expect you to be in good standing, so you would have to be able to get that certificate of legal existence. You would have to catch up all of your annual reports, and then, as we've discussed, if there is a legal issue, you will lose your liability protection. A lot of times, if an attorney can help you, if you have been named as a defendant in a lawsuit, your attorney can catch up those annual reports, can prove that you are an ongoing entity as far as liability protection, that failure to file the annual report was merely an oversight, that will protect you. But companies that are not paying attention to how they're organized and they're not keeping up their reports, they are not able to get loans, they're not able to enter into contracts, and they could be in some legal trouble later on. Wow, so lots of reasons to make sure you keep that annual report up-to-date. But what happens if something changes in your business throughout the course of the year? If you have a change mid-year, so prior to when your next annual report is due, you must report those changes to the Secretary of State. generally, the good rule of thumb is within 30 days of that change. This is new. This has only been a new requirement as of last year. So the Secretary of State used to be very tolerant of any changes that were made during the past year. You could just update everything in your annual report. Now they collect another fee, and they want an interim report as to any changes.It is to be seen whether that will actually affect your liability protection. There really has, haven't been any cases that have tested that yet, because this is such a new rule. So, my advice to businesses is that as long as you're up on your annual reports, you can count on that liability protection. I have yet to see whether a business would lose its annual report because it's failed to do a interim report. Best rule of thumb, however, is just to follow the rules. Whenever there has been a change in your membership, in your business address, your phone number and email, a way to reach you, just go ahead and update with the Secretary of State. Okay, so I think that covers what business owners need to know about compliance and the annual report. What other compliance requirements should they be checking on? So, the first part of the year is also a good idea to review your employment contracts, your payroll. As of January 1st, the minimum wage has increased to $16.94 per hour. So, if you have minimum wage employees, make sure you're compliant with that, or you might have a problem with the Department of Labor. So make sure your payroll reflects that change. Paid sick leave requirements and worker classification rules are also areas to take a look at. So, if you have employees that you have designated as independent contractors, and what that means is that you've been issuing them a 1099 instead of a W-2 for their wages, make sure you can review this either with your accountant or with your business law attorney, to make sure that those employees meet the definition of an independent contractor. If you have an employee, for example, that you manage their day-to-day schedule, you make them report at a certain time they only get certain breaks,

they have a work day until 5: 7:27

00 PM, that is not an independent contractor. You need to issue that person a W-2. And what that means is that you are paying in the employer contributions for Medicare and for the other payroll contributions that an employer has to make. Social Security, for example. Independent contractors, you don't make those contributions, and those independent contractors pay their own self-employment tax. But you need to make sure that you're complying with the definition between the two, or again, you'll have a problem with the Department of Labor. All good to know. There's an awful lot that business owners have to keep in mind when it comes to compliance. Seems like a lot to handle while also running a business. Do you have any tips or resources to share that can help to make it easier? So, as a small business owner, you have to remember how many hats you are wearing. Most of the small businesses, I'm gonna say all of the small businesses that are in my practice, do not have a dedicated human resources department. They don't have a tax compliance department. They don't have much of an an administrative office to make sure that these filings are done, to make sure the payroll is handled properly. So, you as the business owner will be responsible for those duties. So, you can't set up your company and then treat that as a one-time task. That company has to be maintained. So, any of the required business filings, you just need to focus in on the Secretary of State. What do they require? Their website is very helpful as far as compliance measures. Ask your, you know, ask your local attorney to just do a quick compliance rundown to make sure there aren't any deadlines that you are missing, and if there have been some employment law changes. So for example, the minimum wage change. That's a big mistake. If you are not paying your employees at the proper minimum wage level, that can really cause you a lot of heartache later. So a lot of prevention will help you run your business smoothly. So, if you aren't comfortable with the current compliance issues that your company may be experiencing, it would be a good idea to come in and do a consultation with me so that I can look at what's required. So for example, I advise some companies who have multiple limited liability companies. They have different types of businesses that they are running, so they are keeping track of the annual reports for multiple entities. If that's the case, I have clients who just ask me to do the reporting for them, which is fine. That's no problem. I have no problem doing that for them. So obviously if you have a problem with a vendor, you think you may be sued, you have a problem with a client, you need to come in early on and work with an attorney on how to best protect your business. You don't wanna be served by a state marshal and then find out that your business is not in compliance. Another note on that, because we live so close to Massachusetts and Rhode Island, there are a lot of business companies that are doing business in three states. So, a lot of businesses don't know that when they're doing a lot of business over the line, for example, in Rhode Island, they should register with the Rhode Island Secretary of State. So, even though they are a domestic Connecticut company, they should register to do business in Rhode Island, so that way, if they're sued by a Rhode Island customer, they can prove that they are a Rhode Island entity, and then that gives them the same liability protection that they would have had in Connecticut. So, that's another example of something, that's an issue that an attorney can spot that a lot of people may not be aware of. Alright, now let's bring it all together. What are the key takeaways that you would leave with business owners who are listening right now? So, the key takeaway is compliance is not just a box that you are checking. It's not just a fee that the state is collecting. It is a very important part of running your business. So, the more organized that you are, the more that you anticipate these deadlines, you will save yourself a lot of problems and worries as they come down the line. So, you know, avoid that problem where you have a disgruntled employee and then you realize to your dismay that you haven't handled their payroll properly. So, take a pause. Beginning of the year is a great time to do that. You're pulling out all of your records to try to get ready to file your tax return anyway, so maybe use that as a chance to look over all of your filings, and you will just find that to be a good practice. Great. Thanks as always Kate for some really helpful insights. And that's a wrap for this episode of Work. Life. Law. We'll see you again soon. Thanks for listening to Work. Life. Law. If you'd like to work with Attorney Cerrone, you can reach her at 860-928-2429 or KateCerroneLaw.com. You can also follow her on YouTube, Facebook, Instagram, and LinkedIn.