Understanding Annual Reports for LLC & Corporations

Starting a new business is certainly a process that involves countless steps and a lot of paperwork. Part of your responsibility as business owner is staying on top of the state and federal regulations so that your company remains in good standing with the government.

The majority of states require all businesses (LLC, corporation) to file some kind of periodic update — the most common name for this document is an annual report.

The Basics

What is an Annual Report?

An annual report, which is also commonly known as a periodic report, is simply a way for the state governments to stay current on the basic information of your business. Generally, the annual report is filed with the Secretary of State's office and includes a separate fee.

What information is included in the Annual Report?

Every state has different requirements for the information that businesses must include in the annual report, but generally, the following data is needed:

LLCs:

• The name and address of the business

• The name and address of the registered agent

• The names of the members/manager(s)

• The business’s EIN

Corporations:

• The name and address of the business

• The name and address of the registered agent

• The names of the directors and/or officers

• The amount/number of shares

• The business’s EIN

Why is it necessary?

With all of the other paperwork you have to handle for your business, you may wonder why the annual report is even necessary. State governments use a periodic report as a way to stay updated on the basic information and details of businesses.

This report also ensures that businesses are remaining compliant with certain regulations — like appointing a registered agent, maintaining legitimate contact information, and disclosing the business’s ownership.

Most states will charge a late fee if the annual report is not submitted on time, and many states will administratively dissolve the business if the annual report is late by more than 60 days.

All in the Details

While this document is commonly known as an annual report, the actual filing requirements and the name of the report can differ from state to state. Rules regarding the periodic reports can also vary, depending on your chosen legal business entity (LLC or c-corp).

For example, The title of the annual report in California is known as a Statement of Information; Corporations must submit a report every year, but LLCs are only required to submit the statement every two years.

Nevada refers to its periodic reports as the List of Officers and Directors (corporations) and/or the List of Managers/Managing Members (LLCs). Both reports are due every year. The state of Texas requires both corporations and LLCs to file a Public Information Report; however, there is no fee for this annual filing.

In New Mexico, corporations must submit a biennial report every two years;  however, LLCs are not required to submit a report at all. By contrast, the state of Pennsylvania only needs to be updated every decade —  the decennial report is due every 10 years for both corporations and LLCs.

The cost of the annual report can also differ greatly depending on your business’s home state — see chart below for example fees:

Some states do not require either corporations or LLCs to file an annual report:

• Ohio

• South Carolina

• Alabama

Other Annual Filings

In addition to the periodic report, other annual filing requirements for businesses can include a franchise tax. Some states require businesses to pay for the privilege of operating within their borders — this fee is generally known as a franchise tax. A few states, like Texas, demand the franchise tax in lieu of charging an annual report fee.

Toe the Line

The annual report is likely one of the more simple requirements that your business will need to fulfill. Additionally, all states will send at least one notice so that businesses don't fall behind. Your company's registered agent will receive these notifications and can make sure that you stay on top of filing your periodic report.

Last Note: If you need to make changes to the contact information of your business or the registered agent information, check with the Secretary of State website for any additional forms that must be filed with the annual report.