What this is: A detailed description of US annual reports and their contents.
What this means: Filing the annual report accurately and on time will help businesses avoid fees, penalties or dissolution.
What Is an Annual Report?
An annual report is an information report that statutory business entities in the United States are required to file in their formation states and every state they’re qualified to do business. Those entities include corporations, nonprofits, limited liability companies (LLCs), limited partnerships (LPs) and limited liability partnerships.
The purpose of an annual report is to provide current information about a company’s address and present status, including details about its registered agent, directors and officers to the general public and government agencies.
Each US State requires its domestic and foreign entities to file an annual report with some frequency. Some need it to be filed every year, some biennial etc. The due dates could be a common date depending on the entity type or depending on its anniversary of formation or the fiscal year.
It’s up to the company to track what each state requires, and when the report is due. To remain in good standing, filing the annual report is essential. Noncompliance with this requirement could lead to penalties, fees and potential revocation of the company.
What’s Included in an Annual Report?
The required information differs from state to state, and it can differ within a state depending on the business entity type. The fact remains that annual reports are there to give out information about contact persons for a company.
Generally speaking, the annual report requires:
- The company’s legal name
- The company’s date of incorporation
- The company’s home state or foreign qualification
- The principal office address in the state (if applicable)
- The registered agent’s name
- The registered office address
- The names and business addresses of directors, officers, managers, members, or partners
Depending on the state, some annual reports also require information about authorised share capital.
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Who Reads Annual Reports?
Annual reports provide information about a business entity. To that end, annual reports are normally required by anyone who wants to engage with that company, using the annual report to locate the business address or names of contacts.
Annual reports are typically retrieved for these reasons:
- Legal processes – if a lawyer needs information to find and contact the company.
- Commercial needs – if a company wants to send packages to clients, they can find the principal mailing address.
- Legal transaction research – if a lawyer needs to find out how many states in which a company is doing business.
It’s worth noting that annual reports are only correct as of the date it was filed. That means the information could change after the filing date, causing you to retrieve inaccurate or out-of-date information. If the information is out of date, you’ll need to source that information in different ways.
What Happens if a Company Doesn’t File an Annual Report?
If a company fails to comply with the annual report requirements, the state may impose penalties, ranging in severity from late fees to dissolution. If that company continues in non-compliance, the company may fall out of good standing, or get dissolved entirely.
The main consequences of non-compliance include:
- Late filing fees
- Lost good standing status
- Dissolution
- Impacted financing
- Lose contract bids
- Lose benefits of operating as an LLC or corporation
Common Mistakes When Filing an Annual Report
Along with late filing, there are some common mistakes that can result in the rejection of the company’s filing, or deficiencies on the company’s record with the state.
The most common mistakes when filing an annual report include:
- Calculating the wrong fee – when filing, the company must pay either a percentage of its authorised share or a flat fee.
- Using the wrong payment method
- Filing an incomplete report
- Missing signatures – the company must sign and date the report accurately.
- Unauthorised signatures – only persons on the state’s records are authorised to sign annual reports.
Oftentimes, states change the specific requirements, which can make it harder for a company to complete the annual report correctly the first time.
That’s why it’s recommended to hire a third-party document retrieval service, who can retrieve the annual report for your company accurately and on time. They’ll also retrieve all the necessary filing requirements.
This content is provided for informational purposes only and should not be considered, or relied upon, as legal advice.
