CORPORATE TRANSACTIONS & COMPLIANCE BLOG

A Guide to Filing Annual Reports in States with Complex Requirements

By: Jacob Sherretts, COGENCY GLOBAL INC. on Thu, Jan 26, 2017

challenging annual report filing jurisdictions.jpg

Have you ever found yourself under the gun to meet an annual/periodic report deadline in order to maintain your company’s good standing only to find that you are missing pertinent information before you can file?  While many states require similar basic information, there are some states that make annual report filing a bit more challenging. Hopefully, this brief guide to filing in the states with more complex requirements, compiled by the annual report compliance specialists at COGENCY GLOBAL INC., will make the filing process easier for you.

Alaska:

  • If a limited liability company (LLC) is member managed, all members listed on the annual report must show their percentage of ownership in the LLC. Officers with the title “shareholder” are listed similarly for corporate entities and are required to be included on the report if they hold 5% or more of the issued shares.
  • While in a number of states, some types of information about the entity can be changed at the time the annual report is filed, this is not the case in Alaska. A corporation’s stock information (excluding the amount of shares issued) and the NAICS (North American Industry Classification System) code must be changed separately from the annual report form.

Arizona:

  • The term commencement dates of officers must be listed.
  • A Certificate of Disclosure and Statement of Bankruptcy or Receivership must be completed for corporations.
  • Electronic filing of the report is acceptable. However, if a report is rejected, the state will send a rejection form to correct any issues. The form, along with its cover page, must then be physically signed and mailed to the Arizona Secretary of State, scanned and emailed to documentintake@azcc.gov or faxed to 1-602-542-4366. If the corrected filing takes more than 30 days to submit, the entity will be charged a fee of $9 for every month that the report is not filed.

California:

  • For LLCs, California still requires paper filing by mail or over the counter at the state’s office.

Delaware:

  • A corporation’s franchise tax due to the state with the annual report is calculated based on the corporation’s authorized shares of stock (a minimum payment of $175.00). There are two methods of calculating the tax due – the Authorized Shares Method (for corporations having no par stock) or the Assumed Par Value Capital Method. It may take some collaboration and time to obtain the information necessary to file via the Assumed Par Value Capital Method, so make sure to plan ahead for the March 1st due date each year. If not filed and paid on time, the state will implement an immediate $125 late fee and apply interest of 1.5% per month to any unpaid tax balance!

Hawaii:

  • Hawaii allows for electronic filing of annual reports. Although the Hawaii annual report form is relatively straight forward, the turnaround time can sometimes take weeks or even months. This is because a clerk needs to review the filing before it is accepted – even when the report is submitted electronically. Checking back to see if an annual report has been accepted can be time consuming and frustrating. (This wait time is not unique to Hawaii in that other states, such as Massachusetts and Rhode Island, have delays related to a clerk needing to review the filing before it is accepted. But this takes much less time -- approximately 24 hours -- than Hawaii.)

Illinois:

  • Illinois may require a paper filing of the informational report based on the company’s paid in capital. If a paper filing is required, the form is more involved than most states since it requires financial data to calculate the franchise tax due to the state at the time of the annual report filing.
  • If stock information has changed since the previous annual report, a separate form – Cumulative Report of Changes in Issued Shares and Paid-In Capital (BCA 14.30) must be filed to update the information.

Virginia:

  • The Virginia State Corporate Commission (SCC) requires a paper filing with an original signature                            for corporate annual report filings with officer and director changes when the officers and directors are different than those listed on the state’s mailed prepopulated report. (The SCC no longer allows these up
    dates to be made when filing online.) The postmark must be on or before the due date to be considered an on time filing. If there are no officer/director changes from the prior year, then the filing can be made electronically via the state’s eFile system.
  • The Assessment payment must be mailed by check in a separate envelope to a different section or payment made online via the state’s website.

annual reports filing guide.jpgKey to Success: Keeping Good Records and Having a Tracking System in Place

Although many states have different requirements to remain in good standing within their jurisdictions, compliance can generally be maintained by keeping good records and tracking when annual reports (in addition to taxes and required business licenses) are due. Even with the best adherence to these rules, however, remaining in good standing still might be a challenging task, especially if multiple entities are operating in different jurisdictions and are engaged in business that requires multiple reports to maintain compliance.  

If your organization is utilizing a lot of resources to track and handle annual compliance requirements, you may want to consider outsourcing this responsibility to an experienced registered agent service company to save time while ensuring that all of your entities stay in good standing.

 

This article is provided for informational purposes only and should not be considered, or relied upon, as legal advice. 

Topics: Annual Report Compliance