Whether you just formed a new company or whether your company has been around for years, you may need to file an annual report soon. Overlooking this routine filing can have serious consequences. If your company is required to file, you can easily avoid these consequences by knowing the states that require the filings, tracking the filing deadlines, and filing the reports before your company is dissolved for failing to do so. Check out these annual report FAQs and keep your business on track.
If you don’t have time to handle the annual report filings or if you prefer to focus on other priorities in your business, hire a professional to track the due dates for your company’s annual report and handle the annual report filing for you.
Why does it matter?
Probably one of the main reasons you formed your entity (whether a corporation, limited
liability company, or something else) was for liability protection. That protection can depend on
whether your legal entity is in “good standing.” If it isn’t in good standing, and if something bad
happens at the entity level, such as being unable to pay its debts or getting sued, the individual
owners of the company may be personally responsible.
What is an annual report?
An annual report contains official information about a company that is formed or doing business in a specific state. These reports help the state maintain current information about the company’s ownership, management, and location so that other government agencies and the public can locate and communicate with the company more easily. Keep in mind that a few states may call the report something other than an annual report, but the report is similar. For example, the Missouri Secretary of State calls it a Registration Report.
What information is included in an annual report?
The information contained in an annual report varies by state and entity type. Generally speaking, the report includes the following details for a company:
– name and principal office address
– purpose of formation
– names and addresses of shareholders, officers, and directors, or LLC members and managers
– number and par value of shares or LLC membership interest issued
– registered agent name and address
Does your company need to file one?
Almost all business entities need to file an annual report, but your company may not be required to file one. For example, if your LLC is formed or qualified to do business in Kansas, it is required to file an annual report with the Kansas Secretary of State. If your LLC is formed in Missouri or qualified to do business in Missouri, it isn’t required to file a report with that state. A company may need to file more than one report if it is doing business in multiple states.
When are annual reports due?
The report is commonly known as an annual report because in most states the report is due annually. In other states, the report is due every other year, or at different intervals. The due date differs by state. Some states require the filing by a specific date regardless of when the entity was formed or qualified to do business in the state. Other states impose a due date based on the anniversary date of the company’s formation or qualification to do business. And in states like Kansas, due dates are based on the entity’s fiscal year end date. Due dates may vary based on entity type, also. For example, in Missouri all not-for-profit corporations must file their reports by August 31, but the due date for a for-profit corporation’s report is based on the company’s formation or foreign qualification date.
What fees are due with reports that are timely filed?
The fees differ by state and often by entity type. They may be fixed, or they may be variable based on the number of authorized shares of a corporation, the number of LLC members, or the number of partners in a partnership. In some states like Delaware, the state assesses an annual report fee and a franchise or similar tax. The fees may also depend on whether the company files the report by mail or electronically through the state’s website.
Where and how are annual reports filed?
Some states will send a reminder or annual report form in the mail to the company’s registered agent. The forms might be pre-filled with information currently on record or they may be blank. Some states may require the annual report be submitted by mail while other states may have an electronic filing option or requirement. Even if the company doesn’t receive a reminder or pre-printed form in the mail, it will still be required to file the annual report on time. This means independently tracking due dates is critical.
Who signs the annual report?
The annual report must be signed by an authorized representative of the company. Most often, this means an officer or director of the corporation, a manager of the LLC, or a partner of the partnership.
What happens if you don’t file your report on time?
Filing the report on time is critical to maintain a company’s good standing in the state. Some state agencies send a courtesy reminder of the due date to the company’s registered agent. It’s best not to rely on a reminder from the state, though. Instead, calendar a reminder of your own each year, or hire a professional to track this date and file your report for you. States can impose late fees and penalties on a company that fails to file its report. After a short period of delinquency, the company may lose its good standing and be administratively dissolved. These penalties could have major implications if the company is in the process of a merger, acquisition, or sale transaction, applying for a loan or raising capital from investors, bidding on a project, or involved in a lawsuit.