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Annual Report Filing

As a business owner, keep your business entity in good standing by filing your annual report with the state. Suppose you have a corporation, limited liability company (LLC), limited partnership, or other business entity. In each case, the state may require an updated filing on your business annually or semi-annually.

An annual report documents any changes to your business operations and activities. For example, you may change a registered agent, registered office address, officers, directors, or members. Therefore, the annual report should reflect all current information about your business. Some states have different names for this report, like statement of information or annual registration.

Although you may change some business information, you can't change your business name on your annual report. Instead, you'd need to change the name by filing articles of amendment with the Secretary of State.

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Why file an annual report?

The main reason why you file an annual report is to avoid late fees or penalties. Failure to file a yearly report jeopardizes your small business's "good standing" with the state.

If you do not have proof of good standing, it may harm your business. For example, you may not get business licenses or be allowed to do business in another state. Furthermore, you risk losing the right to your business name in that state.

Not filing required annual reports may also result in involuntary or administrative dissolutions. In an administrative dissolution, the state effectively erases the legal business entity. Therefore, you can no longer operate your business entity in that state.

What information goes in the annual report?

If you are not a publicly owned company, you provide only basic updated information from the previous year about your company.

  • Name of your business entity
  • Business registration number or business identification number
  • The current name of the registered agent
  • The current registered business address (not a P.O. box)
  • The names of the current officers, directors, or members of the business
  • Description of business activities

An authorized officer, such as an officer or director, signs and dates the annual report. The report is then filed with the annual report filing fee if required.

Annual reports for small businesses differ from those for large corporations. A corporation's yearly report includes information not typically required for small businesses. Generally, an annual report for a corporation includes various financial information about the business. This can include:

  • A business report from the CEO
  • A company balance sheet
  • Financial statements comparing the reporting year's performance to the previous year (cash flow statement)
  • Financial reports summary

The Securities and Exchange Commission (SEC) requires this kind of in-depth statement from all public and some private companies. These private companies are those with:

  • More than $10 million in total assets and a class of equity securities with
  • Either 2,000 or more persons or
  • 500 or more individuals who are not accredited investors or
  • Securities listed on a U.S. exchange

What is the difference between annual report filing fees and franchise tax fees?

An annual report filing fee is the payment for filing the report with the state. Annual report filing fees vary by state. The franchise tax fee is a fee the state charges to allow the business to organize and register in that state. Franchise tax fees are a flat fee or a fee calculated on the number of stock shares or business assets. Each state calculates and labels business taxes differently, so check with your state.

What does the filing process look like?

Generally, the state sends notices of annual report filings due to your registered agent. Each state also posts deadlines for when the reports and franchise tax fees are due.

Fill out the form and mail it with payment to the Secretary of State Division of Corporations. Most states offer online annual report services. You can complete the online filing and pay the fees with a credit card such as a Visa or Mastercard.

Be sure to file your annual report before the due date to avoid late fees or penalties.

Do you have to file an annual report?

Not all business entities file annual reports. Check with your state first for their rules. Some states do not require annual filings or only require filings every two or 10 years, depending on your business type. Some states require a filing for the first calendar year after business registration.

For example, Delaware business corporations must file a report every year and pay a filing fee of $50 for nonexempt corporations. An example of a nonexempt corporation is a nonprofit corporation.

Delaware corporations must also pay a franchise tax based on the number of corporate stock shares. The minimum franchise tax in Delaware is $175.

However, limited liability companies, limited liability partnerships (LLPs), and general partnerships in Delaware do not have to file annual reports. Instead, they must pay a yearly tax of $300.

Therefore, check your state's requirements for business filings.

What if you miss the filing deadline?

Know your business filing requirements and tax due dates to avoid late payment fees or penalties. If you do not file on time, the state charges late fees and penalties and may dissolve your company.

If you realize you missed the due date, contact the Secretary of State Division of Corporations right away to file and pay any late fees and penalties. If the state dissolves your company, you can apply for reinstatement and pay applicable fees.

Have More Questions? Talk to a Local Business Attorney Today

Don't jeopardize your business by ignoring annual filing requirements. Protect the status of your business entity by filing necessary reports with the state. Consider paying for a business compliance service from a reputable provider to stay on top of dues and deadlines.

If you have questions or run into trouble with the state, contact a local business attorney for help getting your corporate status reinstated.

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