Small companies use annual reports to let shareholders and constituents know how the company is doing financially and what they can look forward to. Find out how to prepare an annual report that reflects well on your company.
Find out more about business management
Excellent
by Ronna L. DeLoe, Esq.
Ronna L. DeLoe is a freelance writer and a published author who has written hundreds of legal articles. She does...
Updated on: February 5, 2024 · 4 min read
If you own or run a limited liability company (LLC), a small corporation, a nonprofit, or another type of company, you're probably filing annual reports with your state's Secretary of State.
Company annual reports are often required by your state, so check with your Secretary of State to determine if you need to know how to file an annual report, what it must contain, and when to file it.
If you own a corporation that has publicly traded shares, you must file an annual report with the Securities and Exchange Commission, and you also may have to file it in states where the corporation is doing business.
Many publicly traded corporations have their own in-house personnel prepare their annual reports, or they farm them out to large accounting firms, professional writing firms, and graphic artists to create impressive brochures to accompany the reports. The focus here is on smaller companies, LLCs, and nonprofits.
Company annual reports are information sheets that a company or organization prepares to let shareholders and constituents know how it's doing financially, what its future looks like, and what important events have occurred over the past year.
Both large and small companies often put photos in the report or accompanying brochure to let people see the "face" of the company.
Customers can relate better to people than to corporations, so it's a good idea to use photos as part of your marketing strategy and for developing your company's personal brand. Putting a face on the company allows your customers and prospects to connect you—or your partner—with your small business.
The first thing you have to decide is if you want your company to prepare the report, to prepare part of the report, or to outsource its production. Annual reports include straightforward text about finances and about the company, actual accounting results, and sometimes graphs and photos. The annual report design is up to you, but you don't want to send out something that looks amateurish.
If your company is able to put together your LLC's annual report or your nonprofit's annual report on your own, you'll save money. In the long run, however, if the result looks sloppy or like something you threw together on a computer with clip art, you're better off outsourcing your annual report. Different companies can prepare sections of your annual report, or you can have an attorney prepare the report for you and file it with the state.
If you choose to do some of the report yourself, you can purchase accounting software to help with the financial aspects of your report. The information to include in your annual report equals most or all of the following, but check with your Secretary of State to see what the company's home state requires so you don't miss anything.
A good annual report will include:
The best annual reports contain the information listed above, expressed in language that doesn't exaggerate what your company can and will do. Write your annual report in plain language. You can save the more descriptive language for the annual report letter, so long as you don't overstate the company's merits.
Write without using clichés, and use an active rather than a passive voice. Look at examples online from companies you admire. If you're not comfortable writing the report and the letter, have someone in your company prepare them or outsource the work to a professional writing company.
While most companies write annual reports to entice people to invest in their company or use their products, a nonprofit annual report serves a different purpose. Its main goal is to attract people who agree with and support the nonprofit's cause. If the annual report also gets people to contribute to the nonprofit company, then the report has done its job.
A nonprofit company prepares its annual report in whatever format works for the nonprofit. The company can use brochures, letters, photos, or cards, or use a digital format with some engaging company information. You can make the prose easy to understand and not as formal as in annual reports produced by for-profit companies. The annual report for a nonprofit works well when it's used as a call to action. And always include information about how people can donate to your cause.
Effective annual reports combine solid text and data in the report itself with more creative prose in the annual report letter. Financial statements make up a good portion of the report, which some people will gloss over, while others will review carefully. No matter what style your annual report uses, make sure the end result is something that reflects well on you and your company.
You may also like
What Is a Power of Attorney (POA)? A Comprehensive Guide
A power of attorney can give trusted individuals the power to make decisions on your behalf—but only in certain situations.
August 29, 2024 · 20min read
How to Start an LLC in 7 Easy Steps (2024 Guide)
2024 is one of the best years ever to start an LLC, and you can create yours in only a few steps.
July 29, 2024 · 22min read