Registering your business in the state is one of the initial and essential steps when you are starting a business. Beyond that, it is one of the pieces of evidence that you are applying business ethics for the benefit of all.

Despite its very basic and simple rule, the process could be somehow systematic hence, strict and hassling. Yet perhaps, you want to face the hassle instead of facing the huge legal consequences when you miss this one which is the most important step in business formation. Below are the consequences you’ll encounter if you decide to unregister your business.

1. Business termination

Beginning to the worst-case scenario, the suspension or termination of your business would happen when the state has caught you not adhering to the business registration rule. This will be indeed a great hassle for you and your employees as the cash flow will be halted and the workforce will be shut down.

2. Monetary penalties

Late registration will be way better than not registering your business at all. In spite of that, a monetary penalty will be imposed on your business along with its necessary documents. As a monetary penalty, the state could demand a penalty fee or interest. In the state of Michigan, for example, they could impose a civil penalty for unregistered limited liability companies (LLCs), payable to the state, of not less than $100 nor more than $1,000 for each calendar month based on Michigan Limited Liability Act. To avoid this tragic profit scenario, you must know that you should register your business before operating it.

3. Lawsuit disqualification

As one of the privileges of registered businesses, they could file a lawsuit in court when they need it. Thus, an unregistered business is incapable of doing so. Lawsuit filing is quite a great privilege for you to protect your business from being manipulated by fraudsters or swindlers.

4. Lawsuit vulnerability

Apart from the incapability to file a lawsuit in court, your clients or customers could have a greater privilege for them to apply for it against you. Dissatisfaction could be their reason from which they could consider the fraudulent act.

5. Members or officers are penalized

A business is an organizational entity from which every member or officer has their own rights and responsibilities in the business. Given that, they could also be penalized in the unregistered business that they are working into. For instance, the state of California has this rule from their California Corporations Code stating “Any person who transacts intrastate business on behalf of a foreign corporation, knowing that it is not so authorized, is guilty of a misdemeanor.”

Conclusion

While all of us are having a struggle with the legal processes, it is still and always crucial to comply with the laws and policies for businesses. From the simple law or rule that you are not able to cohere or secure, a huge dilemma and a great number of consequences may come into your way. Practice business ethics, for you and your entire organization.

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