Managing Annual Reports on Your Own? You Might be Risking Your Business.
Like every other entrepreneur or small business owner, you probably have lots on your plate. But one part of business ownership you can’t ignore is regular compliance requirements by your state, such as filing an annual report.
Whether you are a limited liability company (LLC), a partnership or a corporation, you will need to file your annual report on a timely basis — either the anniversary date of your business formation or by a fixed date assigned by your state. Failure to submit your annual report by the required deadline can result in penalty fees, the risk of losing your good standing and may even result in the dissolution of your business. So what are your options and why is managing your annual report on your own a bad idea? Read on, and we will help shed some light and guide you with some helpful advice.
What Is an Annual Report?
For a business to operate in a state, it will need to file an annual report with the Secretary of State or an equivalent state agency such as the Department of Taxation. Filing an annual report is a key compliance requirement and a way in which a state keeps track of your business, including operating name, the purpose of your business, the names of the officers and directors, the business address and the name and address of the Registered Agent representing the business. If your business operates in multiple states, you’ll likely need to file an annual report in each state.
How to File an Annual Report
Annual reports for small business can be filed online. Your first step is to visit your state’s Secretary of State website. Once there, you’ll need to identify your business entity type and provide the identifying or control number issued by your state, which will confirm that you are in the right location and filing for the correct business.
It’s during your annual filing where you will have the opportunity to update your company information if needed, including the names and addresses of the company officers or any Registered Agent information. A typical annual report usually includes:
- The business address of the company
- The names and addresses of the managers of the business
- Important identification numbers for your business
- The purpose of your business
- Authorized Registered Agent information
- The number of shares of stock issued by the business
The information provided must be accurate or you will risk penalties and even criminal prosecution. To complete the filing, you will need to provide electronic payment and pay the state fee before you can submit your report. If, for whatever reason, you do not want to file electronically, you may still have the option to print out a blank form, fill it out the old-fashioned way and mail in your completed paperwork with a check.
Risks of Missing an Annual Report Filing
While it varies state to state, failure to file an annual report will typically lead to a fine with a request for your annual report to be submitted by a specific deadline. If you fail to meet this new deadline, another fine will be imposed, or your state may simply dissolve your business and remove your good standing status. You will no longer be recognized as a legal business entity in your state and you’ll no longer have any business liability protection. If your business is sued, your personal finances and assets are now at risk.
If you want to do business in another state, you will be unable to get a Certificate of Good Standing to do so. Without good standing, you may not be able to get a business bank account or loan. And, if you decide to get your business reinstated, you may have lost your business name if it was taken by another entrepreneur while you were dissolved.
And don’t forget the fees that will come along with getting your business reinstated. Even then, you won’t be off the hook for submitting your overdue annual report. Some states don’t allow you to reinstate, but rather, start from the beginning. This can mean refilling out your Articles of organization, repaying your Articles of Organization fee and potentially getting a new state ID number, which can mean updating your business licenses and permits. This leads to a lot of unnecessary extra work.
Missing due dates, not having the accurate information submitted and being unaware of any updates made for a state filing requirement are not acceptable excuses for not meeting this requirement. So even if nothing has changed with your business and the information for this current year is identical to that from the previous year, it is still important to file an annual report.
Filing and managing annual reports is the main way that your state keeps track of your business and it’s also a means for the state to collect revenue by charging a filing fee. So either pay the filing costs, which can range between $25 and $400 dollars, or be prepared to shell out even more money in penalty fees, the costs of reinstating your business or both. For the most part, annual report fee costs average around $100, with the state of Massachusetts coming in with the highest fee of $520.
Get Help Managing Your Annual Report
As you can see, your annual report filing is a task that you do not want to overlook. Depending on your state, your report could be biannual, or you could have multiple deadlines to keep track of if you have multiple businesses or DBAs. Why risk the good standing of your business if you forget to file on time? To avoid this risk, filing your annual report may be a task best delegated to a professional service that will ensure timely and accurate filing.
Incfile can take care of the paperwork and all of your annual report filing needs and ensure that your business remains in good standing. Our service will request the required information from you, and then take care of all the busy work for you by filling out the form and filing with your state.
By trusting your small business’s annual filing duties to Incfile, you save valuable time and effort, letting you focus your energy on your company’s success.