What is an Annual Report and Who Needs to File One?
Depending on your business structure, filing an annual report is one of your responsibilities as a business owner. Some businesses are required to file an annual report by law with the Secretary of State where the company operates. An annual report is an official document that businesses must file with the state. It’s a fairly short document that provides updated business information to government officials. Not every type of business structure needs to file an annual report, but if you plan to start a business, you might want to get up to speed on what the document contains and when it’s due.
What is an LLC annual report?
LLCs are one of the entity types of business structures that need to file an annual report. An LLC annual report is also known as a statement of information. It is designed to provide the Secretary of State (and other government officials) with information or changes that occurred within your small business over the course of the last year.
Filing an annual report keeps your business compliant with state regulations, which in turn, keeps your business in good standing.
Every state has its own annual report forms and report due dates. In fact, some states do a bi-annual reports as opposed to annual ones. However, most annual reports ask for the following information:
- Company’s legal name
- Fictitious name, if applicable
- Principal business address
- Registered agent’s name
- Registered agent’s address
- List of business services
- Names of business directors and officers
- Address of business directors and officers
Depending on your business entity size, you can delegate an in-house staff member to prepare an annual report. However, some smaller businesses have a business formation company, like ZenBusiness or Northwest, file the paperwork for them.
There is usually an online filing fee associated with an annual report, which can be paid during electronic submission via credit card.
Who needs to file an annual report?
All statutory business entities need to file an annual report, which includes:
- Nonprofit corporations
- Limited liability companies (LLCs)
- Limited partnerships
- Limited liability partnerships
How do you create an annual report?
Fortunately, companies don’t need to create annual reports. States provide the form online for business owners or the company’s registered agent to fill out. You’ll likely find the form on the Secretary of State website or the site that handles business registration. If your business is required to file an annual report, it only takes a few minutes to fill out.
But before filing your annual report you need to determine if:
You need to file an annual report
As mentioned, not all businesses in every state are required to file an annual report. While some states do not require businesses to file annual reports at all, it is better to be sure and check with the Secretary of State websites. Keep in mind that in some states, an annual report is referred to as a statement of information.
When the annual report is due
Not all states require you to file an annual report every year. Some states require it every other year and some require filing one every 10 years. So before you start filling out the forms in your state, you should determine the deadlines and always comply to avoid any issues regarding your business operations.
What is the purpose of filing an annual report with the state?
Most states require businesses to file annual reports for legal reasons. If your business is sued, the state will reach out to you with official documents like service of process paperwork.
It’s also necessary for the state to have a point of contact for your business. If the government needs to send tax notices or update your company on new filings, they’ll reach out to the registered agent that’s on file.
The annual reports, like business formation documents known as Articles of Organization, are public record. If filed correctly and on time, the public online records will show your business as “good standing.”
What happens if you don’t file your annual report?
If you fail to file an annual report the consequences could jeopardize your good standing with the state, or worse, get your business suspended or face administrative dissolution.
If your annual report filing happens later than the deadline, you will face late filing fees.
However, if you file later than the deadline more than once, the state can take further action, like increasing fines or suspending your business.
Tips to file your annual report on time
Forgetting to file your annual report can happen. Business owners are busy. If you don’t want to jeopardize your business and maintain a good standing with the state, here are some tips that could help you file your annual report on time:
Review your state’s annual report deadline and set a reminder months in advance
As mentioned, deadlines for filing an annual report varies from state to state. Determine the deadline for filing in your state and set a reminder months in advance. It will give you more time to prepare the annual report.
Delegate the job in advance
If you don’t plan to file the report personally, be sure to delegate the job to another person. Ideally, this person is the company’s registered agent. Make sure the person is aware of their duties and the deadline.
Consider working with a business formation company
If you are just starting your business, you can consider working with a business formation company. These third-party companies will not only help you with the necessary filing requirements to start a business, but they can also file your annual report for you.
How much does an annual report cost?
You can e-file an annual report through your Department of State website. The filing fee varies from state to state, and it could range between $50 to $500. Working with a business formation company or business compliance specialist may cost a bit more, but you can rest assured that you can file a good annual report in time.
Do sole proprietorships need to file an annual report?
Sole proprietorships don’t need to file an annual report. However, you still need to report all business income or losses on your personal income tax return.
Do I still need to file an annual report if nothing has changed in my company?
Yes, you still need to file an annual report even if nothing has changed in your company in the previous year. However, not all states will require you to file one annually, so it is essential to determine the due dates and mark your calendars to avoid late fees or worse consequences.
Does the state government send out reminders?
Often, you can sign up for annual report email reminders on the Secretary of State’s website. However, filing an annual report on time is the company’s responsibility. The state will not allow any business to turn in a report late because they didn’t receive a reminder notice.
Is the annual report sent in with business taxes?
No. An annual report doesn’t have anything to do with taxes. This report is filed with the state, not the IRS. The annual report can be found online and submitted electronically by the company’s owner or registered agent. There’s no need for an accountant to review the report because there aren’t any financials on it.
Can an online annual report be rejected?
Yes, the state can reject an annual report if its missing information, has an incorrect signature (only the owner or registered agent can sign the document), or if the filing fee is missing or incorrect. If rejected, the report must be submitted and approved.
Which states do not require an annual report?
All states, except Ohio, require an annual report of some sort.
Which states require LLCs to file a biannual report as opposed to an annual report?
There are states that ask entrepreneurs to file reports every two years, as opposed to every year. Those states are Alaska, California, Indiana, Iowa, Nebraska, and New York.
Do you need to file an annual report if you close your business?
If you close your business, you must file dissolution paperwork with the state. Until that paperwork is submitted and accepted, the business is responsible for filing an annual report and paying the fee. In other words, if you shutter your startup without dissolving it, you’re still on the hook for the reports and the filing fees.
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