Annual Reports: What You Need to Know

The compliance obligations of business owners are many. From licensing and permitting to taxes and payroll, the requirements can seem never ending. One such obligation is the filing of an annual report. Required by most states for most businesses, annual reports outline a business’s financial information, leadership, and general operations. They are also known as statements of information, annual registrations, or tax reports. Some states require them to be filed every two years; in these states, they are referred to as biennial reports.   

Many accounting professionals assist clients in tracking their business information and filing these reports. Familiarizing yourself with the basics of annual reporting can allow you to provide this much-needed service to your clients. Following are answers to common questions about annual reports, as well as guidance for those providing these services.  

Who needs to file an annual report? 

In most states, Limited Liability Companies (LLCs), corporations, and nonprofits must file annual reports. Sole proprietorships and partnerships aren’t required to file annual reports, as they are not considered separate legal entities and do not need to be registered with the state. All states — except Ohio — require some form of annual report filing for LLCs, corporations, or both.  

Companies that operate in multiple states must file annual reports in each state in which they conduct business, adhering to that state’s rules and deadlines. Some states also require businesses to file initial reports upon their formation.  

What is included in an annual report? 

While each state has its own guidelines as to what to include in an annual report, typically they require the following:  

• Company name and address  

• Any DBA/fictitious name 

• Purpose of the business 

• Registered agent name and address 

• Principal office phone number 

• Principal office street and mailing address 

• Names and addresses of a corporation’s officers and directors 

• Name and addresses of an LLC’s members or managers 

• The name of the person executing the document  

When are annual reports filed?  

The deadlines for filing annual reports vary from state to state. Some states base the due date on the anniversary of the company’s formation, while others use the fiscal year or federal tax deadlines. A state-by-state guide can help clarify the specific filing deadlines for both LLCs and corporations.  

How is an annual report filed? 

The process of filing an annual report also varies from state to state, but most states offer an online form. Some states send a blank form, or a form pre-populated with the most current information on file, which businesses must review and update. Some states accept paper forms, while others require annual reports to be submitted electronically. Most states charge a filing fee, which can range from around $10 to several hundred dollars.  

What happens if a business fails to file an annual report?  

The consequences of failing to file an annual report vary. In some cases, a business can lose its good standing, which can hurt its ability to obtain funding from lenders or investors. In other cases, a business can face fines, fees, or penalties. In extreme cases, a business can face administrative dissolution.   

Helping your clients stay compliant with annual reporting 

With so many day-to-day tasks involved in running a business, it comes as no surprise that many business owners prefer to leave the annual reporting to the professionals. Here are some strategies to help you manage your client’s information:  

• Set up reminders for due dates in the state in which the client is registered as well as the state(s) in which they do business.  

• Keep up to date on each state’s rules and requirements, which can change frequently. 

• Consider keeping a file of each client’s pertinent information and update it as you become aware of changes. 

• Double-check the information on the annual report form and ensure it is complete.  

• Ensure all forms are signed and dated as required.   

There are many resources and tools on the market to help accounting professionals manage their clients’ annual report obligations. CorpNet’s free, online compliance monitoring tool can help you keep track of your clients’ compliance obligations. It’s an easy, all-in-one portal that makes everything available in one place. You can monitor multiple compliance requirements for multiple businesses in multiple states all in one dashboard. Plus, it sends alerts for critical due dates for annual reports, taxes, and other business filings so you never miss a deadline!  

With a proactive system in place, keeping up with the task of filing annual reports doesn’t have to be daunting. By setting up a reminder system and ensuring all information is accurate and up to date, it’s possible to provide annual report services and enable your clients to remain compliant.  

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