What are annual reports?
The purpose of annual reports is to provide all government organizations and the general public the details they need to get in touch with companies that operate within the state. No financial information or in-depth breakdowns of your business are required to file an annual report.
These reports are a requirement the year after formation up until the business formally dissolves. So if you incorporated your business in 2023, your first required annual report is due in 2024.
While annual reports are a requirement in all states, they sometimes have different names and frequency of filing. For example, California calls it a “statement of information” and Oklahoma an “annual certificate.” In Pennsylvania, corporations only need to file a “decennial report” every 10 years.
What information do you need to file annual reports?
Before you get concerned about yet another report your business needs to file, the annual report only requires very basic information about your business. Remember, annual reports are for providing general information about your business to the public.
You can expect to provide the following on an annual report:
- Your business’s name
- Your business’s address
- Corporations: names and addresses of officers and directors
- LLCs: names and addresses of managers or members
- Name and address of the registered agent
- Type of business your company is involved in
States that require annual reports
You are required to submit an annual report in every state you do business in where it’s required.
All states except for Ohio require some sort of annual report. But some states may only require an annual report for corporations or LLCs.
Some states have different rules for domestic or foreign entities—foreign simply meaning “out of state.” For example, if you formed your corporation in Delaware but operate in another state, you’re considered a foreign entity there.
What if you don’t file an annual report?
Failing to file an annual report can lead to some stiff penalties including dissolving your corporation.
Penalties vary by state depending on the report requirement. For a late filing, the penalty starts with a monetary fine.
Continued late filing or non-compliance has greater consequences: your business is liable to fall out of good standing with the state. If the state does not issue a certificate of good standing, you may be restricted on the type of financing you can receive from lenders and eventually have your corporation dissolved.
Having your business dissolved isn’t irreversible. By paying an administrative fee, filing any overdue reports, and completing additional paperwork, it’s possible to get your corporation reinstated.
Common annual report filing mistakes
The most common annual report filing mistakes are easy to make. They are:
- Filing an incomplete form
- Making a typo or providing incorrect information
- Failing to have the right person sign off on the form
- Forgetting states where the business is a foreign entity
- Missing an update to a due date or filing process
The solution? Give yourself ample time to complete and review the form. Put deadlines for all relevant states in your calendar and a reminder either multiple days or weeks in advance to fill out and review the form. It’s a small step that saves you both money and an administrative hassle down the line.
The bottom line
Annual reports are a filing requirement to operate in a state. They’re simple forms but can still cause a headache if you forget or miss a deadline.
The best way to prepare is to have deadlines marked in your calendar and give yourself ample time to make sure you do the process right. Doing so can save you from unnecessary penalties and potential dissolution of your corporation.
As a business owner, it can be stressful to find the time for filling out and filing forms. But if you save time on other admin work, that headache becomes a thing of the past. With Bench, you can save hours every week by having our team of pros do your bookkeeping. We help businesses stay tax compliant and in the know on their financial health. Sign up for a free demo today.