What happens next after an entrepreneur incorporates or forms an LLC for their small business? The short answer is that it’s necessary to catch up on a certain amount of corporate compliance.
One of the first documents small business owners will need to file is an annual report. What is an annual report? This report reflects any changes within the business with the Secretary of State. Let’s look at why small businesses need to file an annual report and how an annual report differs from initial, and biennial, report filings.
What’s an Annual Report?
Most states require registered businesses to file an annual report. Filing an annual report means sharing information about the company’s activities and any changes in the business throughout the course of the year.
After an annual report is filed with the Secretary of State, the SoS keeps this record on file. The state is now updated as to whether there were any changes made in the business or with its ownership in the fiscal year.
Annual Report General Information
What sort of information should you include in an annual report? The answer depends on your state of incorporation. Some states will require varying information necessary for filing that differs from other states.
An annual report may reflect changes to the following aspects of the business:
- The principal business address.
- Names and addresses of officers, directors, and/or members of the business, depending on your entity formation.
- Contact information for the company’s registered agent.
- Changes in activities currently conducted by the business.
Initial Reports and Biennial Reports: What’s the Difference?
Before we get too deep into filing an annual report, it’s important to quickly talk about initial reports and biennial reports. Entrepreneurs may see mention of these documents and wonder if they are applicable to their registered businesses.
Most registered businesses will file an initial report before an annual report. An initial report is filed after incorporating or forming an LLC for the business. This document essentially shares basic information about the newly registered business with its state of formation including the business name, names and addresses of owners/members, registered agent contact information, and details about business activities. Some states will also refer to an initial report as a statement of information. Check with your local Secretary of State to determine if you will need to file an initial report.
A biennial report’s major difference from an annual report is that it’s filed every two years. Additionally, some states require filing an initial report within 90 days of filing to incorporate as a specific entity formation.
The best advice is to check in with your local Secretary of State. Determine what the annual (or biennial) report requirements look like for your business and if your business needs to file on an annual or biennial basis.
How Do I File an Annual Report?
Small business owners may file an annual report on their own electronically or with the help of a third-party.
However, it is often advised that business owners work with a third-party such as with a filing specialist or registered agent. These professionals will be able to collect all necessary filing information, rather than the business owner doing it on their own, check state requirements for you, file the paperwork and process the filing fee in a timely manner, and assist in following up once the report has been filed with the state.
When Is My Annual Report Due?
Some states may predetermine an annual report’s date, such as the anniversary of the company’s formation. However, this is not always the case across every state.
Still not sure when your annual report is due? Reach out to your local Secretary of State for the appropriate filing due date. An on-time annual report filing ensures you do not miss the deadline and stay in good standing. Otherwise, your business may get dinged with fines, penalties, or even faces potential involuntary dissolution of the company.
The Value of an Annual Report Filing
After incorporation, business maintenance includes filing certain documents, like an annual report, and paying any outstanding fees in a timely manner.
Filing an annual report does more than ensure your small business is compliant with state regulations. It also ensures your newly incorporated business stays in good standing with its state of incorporation.
Deborah Sweeney is the CEO of MyCorporation.com which provides online legal filing services for entrepreneurs and businesses, startup bundles that include corporation and LLC formation, registered agent services, DBAs, and trademark and copyright filing services. You can find MyCorporation on Twitter at @MyCorporation.