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