A Guide to Entity Management
Entity management is the practice of keeping a company’s vital information in an orderly system, ensuring deadlines are met, and collecting information for regulatory reporting. The mission is to ensure the company complies with the many laws and requirements where it has registered to do business. As your organization grows, so does your need for good entity management processes. Our guide will help you meet your business’s responsibilities and obligations to other owners, governments, and stakeholders.
Why Does Entity Management Matter?
Some business owners question the need to invest in entity management. However, with the growing intricacy of the marketplace, this practice is more important than ever. With regulatory complexity increasing and the need for various filings, organizations require efficient access to accurate and complete records throughout the year.
As more laws get added to the books, it’s vital that businesses stay in compliance, especially if your company has multiple entities or operates in multiple jurisdictions. In addition, with the internet, companies are doing more global business than just a decade ago. A sound entity management system is a powerful tool that can help you stay on top of it all.
Your entity management process affects more than your company’s legal department. Other parts of the company, such as tax and finance teams, should have access to this information. A robust entity management platform that fosters collaboration across multiple divisions of the organization is essential for success.
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What’s Involved with Entity Management?
While every state — and country — has different requirements, many entities, including corporations and partnerships, are responsible for tasks like tracking dates, filing annual government returns, logging shareholders and officers, drafting documents such as bylaws and corporate changes, and maintaining capitalization tables. Some companies complete these vital duties manually, which can work if you manage a small business with one or two locations. However, this responsibility can be challenging if you’re responsible for dozens of entities with headquarters worldwide.
What Are Sound Entity Management Practices?
Up-to-date and accurate entity management doesn’t come with a “one-size-fits-all” approach. Every company is different, and each scenario has multiple factors to consider. However, some fundamental aspects will help ensure the soundness of your processes and result in ease of use and accessibility, including a central repository, data integrity, and skillful organization.
As your company grows, you must answer one fundamental question: How do you follow the specific requirements? A sound entity management system will keep your company in compliance with the numerous requirements, manage data, communication, and reporting for multiple entities, and provide authorized users with secure access to the company’s records. In addition, these documents facilitate collaboration and help create an environment of transparency.
Entity management ensures you can easily track important information and deadlines across your company’s subsidiaries. You’ll create a central data repository, including where each entity is registered to do business, a list of all the company’s officers and directors, and other ownership records. Then, with a searchable digitized format, you’ll get a complete view of your organization’s information, and you can protect this data from a disaster, such as a fire or a flood, as well as from a data security standpoint.
How Technology Can Help Entity Management
If you’re in charge of entity management at your company, consider taking advantage of today’s innovative cloud-based software programs. They can help provide secure access to all your company’s information from anywhere in the world using a standard web browser. As a result, you can typically see improvement in areas such as:
- Implementing a central system database of all the business information.
- Engaging a service provider to update the records at deployment and beyond.
- Electing officers through virtual annual meetings.
- Organizing the entity’s documents, including bylaws.
- Creating and distributing reports.
- Improving database security with user IDs for internal and external contributors.
- Retrieving and filing documents domestically and internationally.
- Submitting required business filings in a particular jurisdiction.
Why Outsourcing Entity Management Makes Sense
Technology has changed the landscape of business, especially from the office-centric structure of the past to today’s expanding work-from-home culture. As a result, many entities are incorporating either a hybrid system or a permanent remote-work policy. With this shift in operations, management and employees prioritize business-critical tasks while outsourcing other work.
At some point in every organization’s lifecycle, you’ll need to reevaluate how to best administer these often mundane tasks. It’s paramount to maintain your company’s data integrity. While that might seem like a simple job, this endeavor can be time-consuming when you consider the volume of information each entity keeps. Corporate secretaries often get bogged down with hundreds of document requests every day. Unless you’ve built a sophisticated system that offers seamless access to unencrypted information in real time, these jobs can sidetrack staff for hours.
Remember, too, that ongoing entity management is just as crucial as your initial setup. You want your company to stay on top of critical administrative functions such as compliance deadlines, ownership changes, director and officer elections, and stockpiling current corporate records. If any steps in the process fail, you can open up your business to penalties and company-wide disruption. When it’s time to update the system, valuable team members spend their workday inputting data rather than managing it.
By farming out certain aspects of your entity management, employees can direct their focus on business-critical assignments. A quality service provider can combine years of industry experience and technology-backed systems that help organizations manage entity compliance. They’ll address your business challenges and offer tailored solutions to meet your company’s unique needs.
Would Your Company Benefit From Outside Entity Management?
If your company is considering outsourcing entity management, the first step in the process is to get a clear understanding of your current strategies. Start by documenting the specific needs of your legal, tax, finance, the administrative departments. This allows an organization to determine where its current processes are successful and where it needs improvements. It also helps create the framework for what successful outsourcing entails. Then, answer these four questions:
- How are you currently completing the work?
- How much time does it take your staff monthly? Annually?
- What is your overall cost to complete the tasks?
- How would removing that workload affect the organization’s bottom line?
By establishing a baseline of cost and potential long-term benefits, you’ll have the information you need to either move forward with an outside service provider or keep your entity management in-house. If you need help determining this information, a quality service provider can help you gather the data.
What Can You Expect From Entity Management Services?
Once you’ve determined an entity management service is the best route for your business, you can expect the following processes:
- Implementing a central database of records that contains all the entity’s information.
- Updating the organizational records and documents as an ongoing service.
- Creating and distributing organizational charts.
- Running and allocating reports.
- Ensuring database security.
- Issuing user IDs to access the records.
- Filing and retrieving documents domestically and internationally, as needed.
- Submitting required local-level filings for the entity to do business in a new jurisdiction.
What Are the Benefits of Entity Management Services?
When deciding whether to outsource an organization’s entity management, it’s vital to consider what departments and job functions this will impact. By identifying these groups and responsibilities, you can better gauge the benefits of outsourcing these tasks. As a result, many companies have achieved greater efficiency in many areas, including:
- Seamless integration of transactions and filings within the central record system.
- Shifting employees from data entry personnel to data managers.
- Documenting corporate actions and other entity-related events.
- Reducing the time required to update information in your database.
- Providing a central point to receive and verify the entity’s information.
- Distributing information to your organization’s relevant teams quickly and easily.
Another significant advantage of outsourcing is identifying routine entity management tasks that will give your organization the ability to direct employees toward high-value responsibilities at the core of your business. By using an expert service provider, you’ll also be able to manage personnel changes better. Whether employees are promoted internally or leave your company entirely, your entity’s matters will continue uninterrupted. In addition, you’ll trust your company’s data is being consistently maintained based on your specifications, despite any in-house staff changes.
This strategic approach also pays dividends from an executive management perspective. Having an entity management provider that takes full responsibility for the upkeep of your company’s data removes any doubt about where to go if problems arise. No longer will officers have to stress about the long-term well-being of your company’s vital information. Whether you’re an independent real estate agent or run a large, international firm, the right solution will manage your data effectively and efficiently, save your staff time and resources, and ultimately increase your company’s ROI.
Entity management is something your organization shouldn’t take lightly. Make sure yours is done right so you can have peace of mind and your team can focus on essential tasks. We are a leading provider of entity management solutions. You can count on us to help your organization define and develop its strategies for success.