An annual report for an LLC is a report that LLCs in most states will need to file with their state. This is because most states like to keep documentation detailing what is happening with the businesses within them. It is also an important piece of business maintenance, much like taking a car for an annual service.
In Florida, for example, an annual report is due on the 1st of May each year if a business would like to avoid paying a $400 fee for late filing. Additionally, an LLC in Florida will be dissolved if it does not submit its annual report by the third Friday in September.
All You Need To Know About Annual Reports
An LLC annual report is much like a census but for businesses instead of individuals. These reports are a means of the state staying up to date and informed about the activities of a business as well as its important basic information. If a business has changed any of the following information, they will need to inform the state of this in their annual report: the name of the LLC, the address, the registered agent, or any other important details about the business.
Different states have different requirements when it comes to the annual report. Some states require an annual report every year, others require it every two years, and others do not require an annual report at all.
Most states will require an LLC to pay a fee when they file their annual report. This fee differs from state to state, and it can be as low as $10 and as high as several hundred dollars. It is advised that entrepreneurs check their state fees ahead of time to ensure that they are not left shocked by the price of their annual report requirements.
The annual report is an important piece of administrative work because the state needs to have updated information regarding the LLC if there is a need to contact the business. Out-of-date information can lead to service of process notices not being delivered. This can result in a lawsuit making its way through the court system without an LLC owner ever having the chance to defend themselves.
Business owners may be tempted to avoid filing their annual reports to avoid the process of filling out paperwork and paying the annual fee. However, this is highly inadvisable because most states have severe penalties for businesses that do not file their annual reports. If a business owner fails to file their annual report on time, they can expect to lose their good standing with their state. There are additional penalties as well, such as late filing fees.
Some states are so severe that they will dissolve an LLC if it does not file its report within the allocated time frame. As a result, a business owner could potentially lose their limited liability asset protection and their status as a business entity. There are remedies for this unfortunate circumstance.
An LLC can apply for reinstatement, but the administrative dissolution of the LLC can lead to several unwanted consequences. These include voided contracts, strained and poor business relationships, and the piercing of the corporate veil. However, an LLC can avoid all of these consequences by filing its annual report on time.
In total, eight states do not require LLCs to file annual reports. These states are Arizona, Arkansas, Delaware, Missouri, New Mexico, Ohio, South Carolina, and Texas. As was mentioned earlier, some states require an annual report on a bi-yearly basis. These states are Alaska, California, Indiana, Iowa, Nebraska, and New York. In Pennsylvania, LLCs are only required to file a report once per decade.
While most annual reports are less intimidating than they seem on the surface, it is possible to get a third party to help with this obligation. Many busy entrepreneurs, which tend to be most entrepreneurs, will enlist a service to help them fulfill this administrative requirement. Companies that offer this service range in their service offerings.
Some companies will do everything on behalf of an LLC owner, while others will only fill out the annual report at the request of an LLC owner. These services tend to be reasonably priced, with annual reports services sometimes being included in the cost of a registered agent service. Most services will start at around $50 and scale up to $150. This will depend on the service provider as well as the level of service which they provide.
Final Thoughts
There are many things that LLC owners will need to know regarding annual reports. This article has broken down all the important information so that LLC owners are prepared when it comes time to file. However, each state is different, and it is important that LLC owners check with their state what the specific requirements are for their state.
Additionally, the annual report obligation can be handled for an LLC owned by a service if this is something that they would prefer. However, this will come with a cost relative to the level of service that the company provides.
