What Are Annual Reports? Why Do I Have to File Them for my LLC or Corporation?

If you have a business registered with your state’s Secretary of State (as all businesses should be!), you likely receive notices from the state that your annual report, or, depending on the state, your biennial report is due. What is an annual report? Why do you have to file them?

Annual Reports are simple forms that tell the Secretary of State basic information about your business. Each state has its own requirements for your company to remain in good standing to do business. This includes the address of your business’s office, who your managers are (if you have managers), and your registered agent’s name and address. Most states impose a fee for filing your annual report. For limited liability companies, for example, the filing fee is $50 in Iowa and $28 in Nebraska, both of which require reports every two years. South Dakota, which requires reports every year, costs $50.

These reports help the state track which companies are still active, as well as keep the company’s contact information up to date. Your registered agent, for example, receives all notices from the Secretary of State on your behalf and, if you are sued, your registered agent is the person who may accept service.

An annual report also helps to protect you from potential liability. If you do not file a report when required, your company will be administratively dissolved. This means that you are no longer authorized to do business in that state. This also means that anyone who sues your company may have a better argument to “pierce the corporate veil”—or, simply put, go after your personal assets. Lastly, an administratively dissolved company cannot initiate lawsuits.

Maintaining your good standing with the Secretary of State is important. If you need to get a loan from a bank, enter into certain contracts, or get certain licenses, you need to be able to prove that you are registered with the Secretary of State and that your business has not been suspended.

Clearly, filing your annual report is important for protecting yourself and your business. Forming a company is a great way to protect your personal assets from liability, but you have to follow certain steps to keep this protection. Annual reports are just one example of corporate maintenance, but they are extremely important.

If you are interested in forming a business or having an attorney handle your corporate maintenance for you, contact Gehling Osborn Law Firm, PLC.