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Annual Reports for LLCs

No matter which type of legal business entity structure you have, there are two kinds of annual reports that new business owners will hear about and should know about.

First, publicly traded corporations are required by the Securities and Exchange Commission (SEC) to send an annual statement to their shareholders detailing the business's financial books for the year and providing the company's overall economic outlook for the future. Generally, Limited Liability Companies (LLCs) are not publicly traded and do not have to be concerned with this report.

There is, however, another type of annual report that LLC owners will want to pay closer attention to. This yearly report is sometimes referred to as a "Statement of Information," and it's typically required by the state where the LLC is organized. Most states require LLCs to file a report with the state updating information like the company's name, address where it operates, and sometimes the names and addresses of the owners as well.

One very important thing to keep in mind as you consider your LLC's annual reports: The forms, requirements, and processes all vary from state to state. For this reason, it is recommended that you check with your state's regulatory business authority (typically the Secretary of State) for the best course of action regarding the submission process.

Key Takeaways

  • There are generally two kinds of "annual reports" in business, but LLC owners need only be concerned with the state-required report
  • This report is also sometimes referred to as a "Statement of Information"
  • While different in every state, these reports typically include the business's most recent contact information and come with a renewal fee
  • The filing requirements vary from state to state, so seek out your state's regulatory business authority for information on cost, timing, and procedure

Understanding LLCs and Annual Reports

LLCs are legal business structures that provide owners with a higher degree of personal asset protection and tax flexibility than sole proprietorships. LLCs are a popular legal entity among new small business owners. Their personal assets are not at risk if the company gets into debt or is sued. Additionally, LLCs can be structured to be taxed solely at the owner's personal income level. This pass-through taxation bypasses any taxes at the corporate level, making it an attractive option for businesses just starting.

Owners are required to register their LLC with their state governmental body in a process called "organization." When an LLC organizes, the company becomes a separate legal entity from its owner and is then subject to state laws and regulations.

One common requirement amongst most states is the annual report. But don't fret, the annual report exists so that your company can stay in good standing with your state, and the information required will not force you to go very in-depth. Still, many states charge renewal and filing fees that owners should be aware of going in.

Think of annual reports as a yearly check-in with your state's regulatory authority. You provide a quick update on some essential information regarding your business, pay your renewal fee, and be on your way.

What Filing an LLC Annual Report Will Do For Your Business

Annual report filing is crucial for a variety of reasons. These reports can:

  • Keep your business in good standing with your state's regulatory body;
  • Alert the state in case your business has changed addresses, phone numbers, or registered agents;
  • Provide you with an LLC identification number so the state can recognize and track your business; and
  • Allow you to pay any necessary renewal or filing fees required by the state.

Note that some states require these reports each year, while other states require them bi-annually. Additionally, states charge differently for filing and renewal, ranging from $9 per year to $800. For these reasons, it is best to consult your state's regulatory authority for procedure and cost.

No matter what you do, never miss your filing deadlines or forget to file your LLC's annual report. Most states will charge a late fee to owners that miss the due date and fail to file their report. In these instances, states typically send a reminder letting the owner know it's time to renew. However, if an owner ignores such requests, states will normally shut down the LLC.

Again, these rules differ with every state. Some states have harsher penalties than others, so make sure to stay on top of your state's requirements.

How to File an LLC Annual Report

Most states allow LLC owners to file their annual reports online or by mail. Owners that file online can expect to pay their renewal fees online with a credit card during the filing process. Owners that file by mail typically must include a state-mandated form filled out with a check enclosed.

Whether filing online or by mail, it's always best to keep a copy of any paperwork for your business records.

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Seeking Assistance

Filing your annual report with the state shouldn't have to be a time-consuming, daunting process. Many successful business owners understand that they can't always do it all by themselves. When time is limited, consider business compliance services from a trusted provider like FindLaw.

If legal questions are mounting, it's always best to seek the advice and counsel of a local small business attorney. Their pragmatic and skillful guidance can help set your business on the right path.

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