What is an Annual Report?

What is an Annual Report?

by Jeffrey M. Salas, November 2015

After you form your business, your legal paperwork isn’t done. You will likely have to file an ongoing report with the secretary of state that keeps your business up to date in state records. This is referred to as an annual report, and if you don’t file the report you could face penalties, fines, and even the legal dissolution of your business.

What is an Annual Report?

Generally, annual reports are forms submitted to government agencies for registration purposes. They help keep records of corporate activity and changes up to date. Most states require these reports to be filed yearly on the date of the company’s incorporation anniversary or shortly thereafter. While there may be differences in semantics and the annual report definition and scope, most, if not every state has requirements for companies, limited liability companies, and other business entities for continuing registration.

Types of Annual Reports

Annual reports, generally, are forms provided by companies to state governments. But, for larger companies, in addition to the state annual reports, they must also file with the Securities and Exchange Commission. These reports are often lengthy and complex and detail required information for shareholders.

State Specific Annual Reports

The most common type of company annual report is the report required by the state. Each state is different, so you should check the rules within your state. Generally, however, these reports are filed once a year, and often come as a form in the mail for the company to fill out and send back. It’s usually a straightforward process to record any changes to the company. Annual reports can also include a number of questions including:

  • Officer and Director Information
  • Authorized shares
  • Paid in capital
  • Other capital investments
  • Franchise tax calculation.

Usually there are fees involved in filing the report.

Pro tip:  Make sure you are working with your accountant to calculate the different figures included in the form. The level of detail required in the report is going to vary from state to state.

How do I file an annual report?

Filing an annual report is usually very simple. In some states, companies can file an online annual report. and pay the associated fees online. In many states, the state regulator (Secretary of State, Department of Finance, Department of Corporations, etc.) will send a form and notice in the mail to the company’s registered agent.

What happens if I don’t file my annual report?

Filing the annual report is usually necessary to keep the company in good standing as a registered entity. Filing late may cost the company late fees, and failing to file at all could lead to administrative dissolution of the company –that means the state will no longer recognize your company as a legal entity. While the company can often apply for reinstatement, dissolution itself may affect the company’s contracts, business relationships and pierce the corporate veil, exposing the owners to personal liability.

For Companies Subject to Mandatory Securities Filings

For most companies, the state annual report is the only annual report required. But, if the company is publicly traded, listed on a stock exchange, or has $10 million or more in assets and 500 or more shareholders, it usually has to file a Form 10-K with the federal Securities and Exchange Commission. This tax filing is a very detailed financial report and must include, among its information, company financial statements. As you can guess, the Form 10-K is really intended for giant corporations, not small businesses. If you think your company needs to file a Form 10-K, make sure to consult with a securities attorney.

LegalZoom can help you file an annual report for your business. Answer a few questions about your company, and we’ll help you fill out and file the paperwork.