What is an Annual Report?
An annual report is filed once a year with the secretary of state and has the role of keeping your business up to date in state records and communicate any changes that might arise. Failing to file such a report can result in fines, penalties and, depending on the period of time that you have failed to file it, the legal dissolution of your business. Even if there might be some differences in what is required to include and the process of filing, annual reports are required in every state as a procedure of continuing registration from companies, LLCs and other business entities.
Types of Annual Reports
As a company, you need to file annual reports to the state government where your business entity has been formed. If your company is a large one, then you might need to file an additional annual report with the Securities and Exchange Commission. This additional report is usually a lot more complex and detailed and includes financial and shareholders information.
State Specific Annual Reports
Generally, companies need to file an annual report required by state, which is the most common form of annual report. As the title says, it needs to be filed once a year and usually the form is received by email, so all the company has to do is fill it in and send it back. Still, given that each state might have different rules, it is best to make sure you know exactly what the process of filing the annual report is in your state and what are the associated fees.
Given that one of the purposes of the annual report is to register any changes in your company, it will usually include information such as:
- Information about the Officer and Director
- Authorized company shares
- Paid in capital and other capital investments if there is the case
- Franchise tax calculation.
Even if the annual report is usually a simple form to fill in, work with your accountant to make sure the figures included in the form are correct.
How do I file an annual report?
Filing an annual report is a very simple process and in some states it can be made on-line, along with the payment of associated fees that is also available on-line. In most of the states, if you are the company’s registered agent, you will receive a form and notice in the mail by the state regulator (Secretary of State, Department of Finance, Department of Corporations, etc.).
What happens if I don’t file my annual report?
Failing to file your annual report may involve late fees, if you are filing late, or it could lead to administrative dissolution of your company (your company will no longer be recognized as a legal entity). If such happens, you can often apply for reinstatement, but the dissolution itself will affect your standing contracts and business relationships. Additionally, administrative dissolution might pierce the corporate veil, exposing you as owner to personal liability.
For Companies Subject to Mandatory Securities Filings
While most companies in the U.S. only need to present an annual report, if your company meets one of the conditions presented below, you will also need to file a Form 10-K with the federal Securities and Exchange Commission. This is a very detailed financial report including the company’s financial statements meant for giant corporations that meet one of the following:
- The company is publicly traded
- The company is listed on a stock exchange
The company has $10 million or more in assets and 500 or more shareholders
