What is an Annual Report?
Have you received a letter or email from that’s got you wondering “What is Annual Report?” They are hitting mailboxes now asking business owners to complete their required annual filing with the Secretary of State. But what is an Annual Report, and do you have to file it?
The first quarter of every year brings a bevy of due dates to a business owner, including one of the most important but overlooked annual filings, the Annual Report. Generally filed with the Secretary of State, this filing is what allows an entity to legally conduct business in a state as a corporation, LLC, partnership, or non-profit. Annual Report filings are not part of federal tax filings or state tax filings and is separate from any business licenses applied for.
Its purpose is to provide the state and the public with information pertaining to the entity, like ownership structure and business activities, as well as how to communicate with them in regard to its business dealings in the state. If there is a board, the report provides details as to who those members are and in what capacity they serve the organization. Additionally, this filing provides information on a Registered Agent – a person or company that is authorized to receive legal and government communications on behalf of a business.
Requirements vary by state and entity structure, as do deadlines and fees associated with filing.
What happens if I don’t file an Annual Report?
One of the most basic tenets of the Annual Report is that it allows an entity to legally conduct business in the state of filing. If this filing is not completed by the state’s deadline, the entity will be dissolved and will no longer be able to legally conduct business.
Legal standing in the state you operate in can affect your ability to bid jobs, obtain financing, and maintain good standing with the state. While it is possible to reinstate an entity once dissolved, there will be additional fees or penalties associated with reinstatement. Reinstatement may require additional documentation from other agencies and can take time to process.
It is the responsibility of the business to make sure this filing is compliant, even if a notice is not sent by the state to remind you. Check with your bookkeeper – this may be an item they can help you track!